Decarbonizing Commerce

Mark Rushmore is co-founder and CCO of SURI, a sustainable electric toothbrush company. Mark and his co-founder began their careers at P&G, one of the great incubators of talent within the CPG industry. With a long entrepreneurial track record and some exits, he and his co-founder had the opportunity and the idea to start a consumer product brand that doesn't compromise on effectiveness or performance, produces a product that's more sustainable, and educates consumers about how to use it sustainably throughout the product's life cycle. Hear Mark’s insights about decisions from product design, materials, packaging, and growing direct to consumer and and through retail.
Learn more about Mark Rushmore:

• Link to SURI’s website
• Link to guest’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

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TRANSCRIPT BELOW:
Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Hello, welcome to another episode of the Decarbonizing Commerce podcast. I'm Keith Anderson. I'm guessing like most of our listeners, you brush your teeth every day. I hope you do. And If you do, I think you're going to enjoy today's episode with Mark Rushmore of a sustainable electric toothbrush company called SURI, which is short for Sustainable Rituals.

Mark and his co-founder began their careers at P&G, which I think many acknowledge is one of the great incubators of talent within the CPG industry. And After a couple exits, you know, long entrepreneurial track record and some exits, he and his co-founder had the opportunity and the idea to start a consumer product brand that didn't make any compromises on effectiveness or performance, but goes a long way towards producing a product that's more sustainable and really educating shoppers and consumers about how to use it sustainably throughout the product's life cycle. And in speaking with Mark, it's clear that he and his team have thought deeply about decisions from product design and ingredients and materials to packaging to distribution strategy through channels like Amazon, along with a direct to consumer and growing retail presence and, having used the product and, you know, going through the unboxing experience and seeing how, in essentially every touch point with the shopper, they are reinforcing the dual messaging of a product that really outperforms along with an approach to product design and usage that is lighter on the planet and, you know, ultimately leads to a business that's profitable, which, unlocks most doors. And economic sustainability really enables environmental sustainability. So I'm eager for you to meet Mark Rushmore, hear about his entrepreneurial journey, and learn from some of the choices they've made at SURI.

Here's Mark.

Mark, welcome to the Decarbonizing Commerce podcast. Thanks so much for joining us.

Mark Rushmore: Keith, thank you so much for having me on. We've had multiple emails to get to this point and I know I've not been available a couple of times, so I'm just super happy to be here and really grateful. Thank you.

Keith Anderson: Well, we're really excited to have you and, I know you've been busy. Congrats on the recent funding. You've actually extended a streak of ours. I think you're the fourth guest to come on the show within a few weeks of announcing fresh capital. So congrats.

Mark Rushmore: Yeah, well, thank you very much. It's, yeah, no, it's really nice to have that done and now to, you know, refocus all of our time and attention back into growing the world's most popular and sustainable electric toothbrush.

Keith Anderson: Well, maybe a great place to start would be a bit about your background and your co-founder's and what led you to this category and starting SURI.

Mark Rushmore: Sure, would you like the, short or the medium version?

Keith Anderson: How about medium?

Mark Rushmore: Okay, medium. So, I grew up in, Scotland and from when I was a child, I was just really interested in business. I set up a rival catering company, to my school, and that grew quite, quite a lot by the time I was like 17. And then when I went to university, I studied history, but I really found my passion became alive when I set up a society for history students.

I managed to get the sponsorship from like the History Channel and, you know, I grew a committee, we raised, thousands of pounds. And I realized like, wow, I feel so alive, like, wouldn't it be great to continue this in my life? But I'm also, you know, conscious that you should, minimize your downside, maximize your upside. So I thought, "what better place to start my career than Procter & Gamble?" You know, the world's largest manufacturer of, fast moving consumer goods.

And so I spent a few wonderful years there learning all about the trade and ultimately I was managing Pringles when it was sold to Kellogg's. So I helped transition that business, which was worth over a hundred million dollars, successfully to Kellogg's. And then I took the opportunity and a rather generous payout to explore some other opportunities, that I wanted to.

In fact, around the same time, unfortunately, an acquaintance of mine from university committed suicide. And I just thought, you know, the combination of having this like Capital for the first time in my life and realizing how short life can be. I thought, you know, I'm not going to wait until I retire to live out my dreams.

I'm going to write a list of them and see if I can do them all now. So I wrote a list and one of those things was to set up a company. The other one was to do it like a physical challenge. And another one was to learn about digital marketing. So I became a ski instructor in Canada briefly, then I cycled from Canada to Mexico unsupported, and then I won a digital media competition to sail around the world as part of the Clipper Round The World Yacht Race.

I actually discovered though on training, I'm not a massive ocean sailing fan, so I decided not to do that, but instead I set up a business. So I set up the UK office of a German experiential marketing agency, for my kitchen table and scaled that through to exit five years later. And during that time I won Oral B as a client as well as BMW and Jaguar.

And so we manage their trade shows and I kind of really understood like how they engage with the dental profession and how important it is and how electric toothbrush sales work. And then during that time, I was invited, very fortunately to attend the Cannes Lions, which is like the Oscars of the advertising industry.

And I had a chance meeting with the Unilever CMO, Keith Weed, who invited me to a party that he was hosting on an island off the coast of Cannes in the South of France. It's kind of like, you couldn't quite believe it. I had to pinch myself. But he said, "if you can get down to this boat at 1:30, you know, you can go across to the Island."

And then when I got there on the boat, it was, my, my now co-founder. So I met him there, and we got chatting at this event and it turned out he'd also used to work for Procter & Gamble. I was in sales and strategy. He was in finance and marketing. I was in UK. He was in Geneva. He managed Venus Razors, so Gillette across EMEA.

And we both just agreed that, you know, consumer products are so important and invaluable in our daily lives, but a lot more could be done to make them more sustainable and not as an afterthought, but from the beginning. But also to use e-commerce as a way to compete more effectively versus some larger FMCG people like Procter & Gamble.

And that also experience was really crucial, you know, since the advent of the iPhone, I think consumer expectations in terms of the unboxing, the advertising, the customer service, have improved. So Yeah, so Keith and I, you know, got chatting, became friends. And then a few years later, once I'd sold my company and he'd sold his company, then we came back together and said, look, it's time we do something about this issue, which is that every year 4 billion toothbrushes are thrown away and end up in landfills and oceans.

Virtually every brush you probably ever used, Keith, since you were a child, probably still exists and will do for a long time because of the materials they're made from. What's more, people don't necessarily love their existing brush. They haven't changed much in shape in 30, 40 years. You know, you get the gunk on the bottom.

People complain about poor battery life and no one's using the Bluetooth apps in the research that we've found. So, we thought, "could we make a brush that's more sustainable and better for the environment? And this is the result.

Keith Anderson: So, I like the medium intro. There's a lot to dive into there. You told me before we hit record that you haven't been to Colorado, but if you like skiing, you've got to visit at some point.

Mark Rushmore: Oh, I would love to come to Colorado. In fact, a lot of people who order SURI in the US are based in Colorado. And I think it just speaks volumes to, you know, there's a lot of people with a shared, a value system and belief in, in the future of our planet and the outdoors.

Keith Anderson: Yeah, Boulder in particular is sort of a, hub for sustainable CPG brands.

Mark Rushmore: Definitely, you know.

Keith Anderson: So, you know, you mentioned at least three areas that I want to get into, one of which was the product design. You know, one of which was the, channel strategy. And so, we'll come back to the third, but why don't we talk about the product design itself, because, you know, you've mentioned both the experience and some of the sustainability attributes.

How did you approach deciding on materials and, you know, designing for both the product's effectiveness and position in the bathroom and its environmental footprint?

Mark Rushmore: Sure. So we, we started with the premise that we didn't think sustainability should come with a compromise. I think in like, I don't know, let's call it sustainability 1.0, you know, you might have a product, but it wouldn't necessarily give you a great performance. You know, you were kind of compromising, "okay, this isn't going to wash my clothes as effectively as a regular detergent."

And two, you might compromise on the design, on how it looks, on the weight or, or how it, you know, how it feels. And so when we set out on this, we thought, we just don't think that because something's made more sustainably, it should come with any compromise on performance or design. So that was the starting premise.

But then when it came to like, "okay, how can we make a more sustainable brush?" So we, you know, we looked firstly at materials, you know, are there better materials than the multitude of plastics which are currently made in electric brushes? And one of the points we started with was with the heads. So obviously the heads get thrown out and you replace them.

Dentists recommend every three months. So whilst billions of toothbrushes get thrown out. You know, the quantity of heads the even more enormous. So our head is made from cornstarch and our bristles are made from castor oil. Both plant-based materials that when they degrade, won't degrade in the same sort of quantity of microplastics as say, like traditional toothbrush heads.

We also offer free recycling, in the US and the UK. We have this prepaid mailer bag, which in itself is compostable. So once you're done with the head, you just pop it in. We ask people to put four heads in, you put it into the post and it'll come back to us. We're working with the University of Exeter here in the UK at the moment on like how we're making new products out of the recycled material.

But to your question, like how do we do that? Well, we looked at lots of different academic papers, lots of different, you know, research into different materials and this is what we determined was going to be the most effective way. Now, if you go to a factory, as we did, in fact, I think we went to 24 factories roughly, 23 of them told us that's not possible, you know, or just straight out laughed at us on the phone.

They said, you know, "why don't you just take the ones that we have? Like, they're tested." We were told that this material wouldn't be strong enough, that it wouldn't pass certain tests. There's no point in even trying. Now, I think the thing is, most factories are, you know, are optimized for efficiency. So they want to turn out more of what they already have.

And so it's, it's rare to find a factory that wants to experiment and test, but fortunately, Gibb is the most stubborn person I've ever met. I mean, he, he will, he just kept saying "it's possible, it's possible, like we will have to find someone else." I'll admit, like at various points, I thought, Maybe it's not, like, you know, maybe it's just not possible.

It's like, "we can't do it. We have to look into other solutions." But fortunately, you know, he kept going. On the 24th one we found someone who was like, "okay, well, I'll do the test. If it doesn't work, it doesn't work." We said, "of course, like, if it doesn't, we're not going to try and push a product that doesn't work."

And, fortunately, you know, after multiple iterations, we found a way of using these materials, which no one had done previously. And then additionally, our brush you'll see is about, it's about half the width of traditional electric toothbrushes. So it actually means we're using less material as well, which is another sort of fundamental part for reducing your footprint.

The handle's made from aluminium, which is highly, recyclable, as you'll be aware. And then we also included this tiny screw on the bottom that enables us, unlike 99 percent of brushes, which are fully sealed, to be able to remove, you know, the battery and either replace it or to be able to strip it and then ensure that everything gets recycled appropriately, or that we can reuse certain components that we can either, you know, reuse the motor or different elements.

So that's been an important part. But then also, you know, we thought about packaging. So our packaging is 100 percent plastic-free. You'll also notice about half the size of traditional packaging in our category. 

And it's been thoughtfully designed with FSC approved materials so that it's, you know, as sustainable as possible.

But I'm going to put my hands up, Keith. Could we be better? Absolutely we could. And we are constantly looking. In fact, I've just come from a meeting right now. We found a way to, I think, reduce packaging, in our next iteration of the packaging by I think we're seeing 23 percent and we found some innovative space, you know, savings, but I mean, this is also a world exclusive for your podcast, but we've also got a better way of doing the insides with a new material which is even more sustainable than what we have currently.

Keith Anderson: Inside of the packaging?

Mark Rushmore: Inside of the packaging and also improves efficiency on the line. So like it's actually going to be faster, for packing, but it's also more sustainable and it's also a better experience for the consumer. So we are far from perfect. But we have this sustainability in our DNA, you know, we, we kind of, we'll constantly strive to see if there's ways we can do things better.

And you know, it's, it's an ongoing journey that will, will never end.

 So yeah, that, that kind of covers some of the, the green credentials that have gone into the design of the brush and the packaging.

Keith Anderson: It's, it's definitely a moving target and maybe it's a nice segue to some of the e-commerce discussion because as I listened to you describe even some of these more recent discoveries and potential enhancements, it calls to mind programs like Amazon Compact by Design and, you know, Amazon's own certification that basically incentivizes, lightweighting and reducing the package to product ratio. You've worked, with Amazon programs like that.

Do you find that some of your channel strategies have led you to some of these decisions that are, are more space efficient and end up yielding economic benefits?

Mark Rushmore: So it's a great question. And I must say from the outset, like I'm a, I'm a big fan of what Amazon did. They actually approached us pre-launch and said, "Hey, we're going to be running this accelerator. Would you like to be part of it?" And, you know, I'll throw my hands up when Amazon came to us saying, "Oh, we've got this sustainability accelerator."

I was thinking Amazon and sustainability are not two words that you necessarily immediately kind of put two and two together. But as we sort of assess whether we thought, you know, "could we do the program?" You know, change in our opinion will require everyone to, you know, take part, not just small companies, but, you know, the potential impact that Amazon can make by influencing, you know, their supply chain decisions, et cetera, is so enormous.

And then when we joined the program, we learned about all sorts of different initiatives that they're sort of taking part in. But also, you know, things like you, like you mentioned, Compact by Design, which then forms part of their Climate Pledge Friendly badge and certification, is really important.

And what it enables, I think, lots of different brands to do is like At least have guidance towards making more sustainable decisions, and yeah, just kind of making that awareness. In the same respect, when we went through the B Corp certification, a lot of people say like, "oh, is it so great being a B Corp because, you know, you get the recognition with consumers?"

But that's only really one part of it. The main thing that B Corp helped us with was it kind of steered us towards improving policies that we hadn't even considered, like in, in all honesty, and like to think about ways we could improve our business and methodologies. And it kind of provides a framework for how you could do things a little bit better.

So, so yeah, so I mean, for us, our mission is to kind of constantly improve the sustainable nature of our product. In fact, SURI is short for Sustainable Rituals. And so we, we sort of grasp with both hands, any, any kind of framework or anything that people suggest, you know, might be useful and we assess it, work out whether it's something that we think will make a difference and then go from there.

Keith Anderson: Well, and you, you mentioned, you know, some of the efficiencies that you're finding as, you continue learning and iterating. I think one of the pieces of, I'll use air quotes, "conventional wisdom" that I think sustainability 1.0 has sort of left as a legacy is the idea that even if the more sustainable product is on parity in terms of effectiveness, it tends to be, more expensive.

And I think there's great data. In fact, you know, just, you know, 10 days ago or so, New York University Stern, School of Business did their annual conference on sustainability where, along with Cercana, they often report out, you know, "here's the share of products that are marketed as sustainable and willingness to pay a premium."

But, you know, in terms of the competitive dynamic, what are you finding in oral care and how have you had to approach some of those choices about product design?

Mark Rushmore: Totally. It's a really great question. And I think I would say from the outset, like, you know, ideally, you want to make more sustainable options available to everyone, you know, to absolutely everyone that, that's got to be the goal moving forwards. I think our product sits at a more premium end of the category.

However, it does sit amongst a group of competitors who are charging the same or a lot more. I think some of our competitors, their products now are 500, 600, 700, 800 dollars. And we're competing, you know, ours is just over a hundred dollars. So, you know, it's, it's an interesting sort of point. Now, we would love to make a products which are more cost effective, you know, so that we can hit like a wider range of consumers at a different price point. Right now, we don't have that product, but you know, that's firmly in our, in our targets, you know? So I think we have a competitively priced product, which offers much more sustainable features as well as like great performance features, you know, so our battery lasts 40 days on a single charge, whereas a lot of toothbrushes last maybe three to five days.

You know, we have 33 000 sonic vibrations. We were tested in Sallis Research in the US, which do the the clinical trials of a lot of big brands and ours was proven to be, you know, as effective or more effective. So yeah, so I think it is possible to create a competitively priced product, which is sustainable.

Keith Anderson: And is there any messaging to shoppers around total lifetime cost of ownership? You know, I've seen in some categories that have a similar, you know, sort of handle and cartridge model, shaving in particular, some of the emerging brands that are plastic-free, actually, talk about, you know, yes, the handle may be more than the, just to use an example, Venus or MACH3, you know, that you're using today, but it'll last forever.

And because the blades are so low cost, it'll pay back in 18 months, for example. Is that a conversation happening with products like yours?

Mark Rushmore: You know what, Keith, it's a, it's a conversation that I'm going to re bring to the team, following what you're saying, because this is one of our major benefits. We don't talk about it enough, you know, because our price is actually already competitively priced versus these, like, throwaway products that you're going to need multiple of in the same time that you need one SURI.

It's a real competitive advantage of ours, and I don't think we, we probably make enough of it.

Keith Anderson: And I imagine, you know, with some of the potential repair characteristics, I don't know how big a component of the value prop that is, but if your product is designed for repairability and basically others are designed, to make it impossible, you know, that planned obsolescence has a cost also.

Mark Rushmore: Definitely, definitely. And that's the thing, it's like, it's not just more economic, it's not just more sustainable, it's also much more economical, you know, to, to buy a SURI. 

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

Hey, it's Keith Anderson from decarbonize.co inviting you to join our brand new Slack community for retail, e-commerce, and consumer product professionals that want to keep up with what's new, interesting, and actionable in industry, climate, and sustainability action, and connect with your peers. As I got into this work, one of the things that I found so invigorating is how passionate and willing to help everyone is.

But I haven't found a community composed of people across functions in the industry that are working in or want to work in climate and sustainability. And so we're launching the community to connect both sustainability experts and practitioners, and people in conventional roles like product design, packaging, supply chain, marketing, and merchandising to share their work, ask for help, connect about career opportunities, keep up with the latest industry development and we'll be previewing who our upcoming guests on the podcast will be and giving you an opportunity to pose questions to our guests. So I can't wait to meet you and have you meet some of the other members of the community. To join us, you can visit decarbonize.co. You'll see a call to action on the homepage or use the intelligence menu at the top of the page where you'll also see a link to join. 

Well, I'll set the calendar reminder now and I'll, I'll check back in about a year.

Mark Rushmore: Look forward to it. Maybe we could do it in Boston.

Keith Anderson: That'd be nice. Or maybe on the slopes out in Colorado.

Mark Rushmore: Yeah, love it.

Keith Anderson: Well, Mark, if folks want to learn more about SURI or get in touch, where should they head?

Mark Rushmore: Sure. So if you go to our website, www.trysuri.Com, or you can search for us on Amazon, or you can just type in "SURI Electric Toothbrush into Google and that'll give you some more info. And if you want to get in touch with me, my name is Mark Rushmore and you know, by all means, you know, send me, send me a hello on LinkedIn, mention the podcast and I'll give you a discount if you want to purchase the brush.

Keith Anderson: Fantastic. Well, Mark, thanks so much for joining us.

Mark Rushmore: You're very welcome. Thanks for having me. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce. 




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In this episode of Decarbonizing Commerce, host Keith Anderson welcomes Matthew Isaacs, co-founder of My Emissions, to discuss the critical intersection of climate innovation and commerce, focusing on the environmental impact of food production and consumption. Matthew shares how his journey with My Emissions began during the COVID-19 pandemic when he and his co-founder sought ways to reduce their environmental footprint. Recognizing that food accounts for a significant portion of global greenhouse gas emissions, they developed My Emissions to help food businesses calculate and communicate product-level emissions. The platform aims to bridge the gap between emissions data and consumers, empowering businesses to make informed sustainability decisions while engaging customers through carbon labeling. Matthew highlights the platform's dual focus on emissions data and communication, enabling companies to navigate sustainability challenges and drive meaningful change and the importance of transparency and collaboration in achieving a low-carbon future for the food industry.
Learn more about Matthew Isaacs:

• Link to My Emission’s website
• Link to Matthew’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

• https://decarbonize.co/member-benefits/ 👈

If you enjoyed this episode then please:

• Follow, rate, and review on Apple Podcasts
• Follow and rate on Spotify
• Learn more about Decarbonizing Commerce at decarbonize.co

TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Welcome to the Decarbonizing Commerce podcast. I'm Keith Anderson, and my guest this week is Matthew Isaacs, co-founder of My Emissions, which helps food manufacturers, retailers, and restaurants calculate and communicate product- and menu-item-level emissions. And this is a topic that remains really interesting to me for a handful of reasons. Number one, food is a huge source of emissions globally, one of the largest sources of emissions within retail and consumer products. Secondly, the value chain represents a huge percentage of those emissions, and it can be challenging and complicated to calculate those emissions.

And thirdly, labeling and communicating emissions for consumers with the objective of changing behavior is something that really interests me. You know, we've seen, nutrition and health and wellness schemes meet with varying degrees of success, and they have varying levels of standardization, country to country, retailer to retailer.

And so I'm always eager to speak with anybody that is actively working in that space, or studying what works, and Matthew is one of those people. So, I'm very excited for you to meet Matthew Isaacs, co-founder of My Emissions. 

Well, Matthew, welcome to the podcast. Great to have you with us. Maybe to get us started, you can tell us a bit about how you ended up starting My Emissions.

Matthew Isaacs: Absolutely. So our story began with the COVID 19 pandemic. Myself and my co-founder, Nathan, we just started exploring how we could reduce our own environmental impact. The two of us are longstanding friends. We were both at Cambridge University together here in the UK, and we've always been data-minded.

We've always been thinking about what we can do to be more sustainable, to reduce our impact and how we can make a difference really to society. And in the context of having a lot of time on our hands, we have the concept of furlough here in the UK. And so we're working at the time, it really gave us the opportunity to start exploring what we could do to reduce our impact.

And we very quickly realised that food is the biggest and best way that individuals can reduce their impact. What we see is that around one third, 33 percent of all global greenhouse gas emissions are coming from food right now. And what really excited us is this idea that we weren't asking people to spend tens of thousands of pounds or dollars on solar panels or buying a new car or vehicle, changing their holiday habits, things that are very emotive, things that can cost a lot of money. Instead, what we can do is suggest simple swaps that often don't cost more money. And through that, we can actually quite quickly and significantly reduced our carbon footprint.

and that was our starting point. It was very much a personal, individual led, starting point. And over time we've really transitioned into being much more of a platform for food businesses. Because what we realized very quickly is that not only do consumers have this problem, but actually food businesses and companies that could be restaurants, brands, FMCG, They're all facing the same problem.

And there was this, ultimately what we saw is this big disconnect between emissions data from food in a research environment, and that data getting across to not only consumers, but also to food companies. And now that's really the gap that we're trying to fill with my emissions. We're trying to be the provider that can bridge that gap, that can, that is willing to open the can of worms that is emissions reporting and emissions labeling and digest all of that information and come out with something that's pragmatic, that's simple, and that can scale.

And that's where we've got to today.

Keith Anderson: So, I hear there's sort of two, legs to the platform. One of which is the emissions data itself. And the second is really about the communication and the labeling. So, why don't we take those one at a time. Is there something unique about food as an industry or as a category that leads you to focus on that specifically versus some of the industry- or category-agnostic solutions?

Matthew Isaacs: I think there is, and the first thing is food's wide impact, the second thing, and this is a real challenge, probably the biggest challenge in our work, is the fact that the majority of emissions are coming at the farm level. So when we look and measure the emissions of a product, we're looking at the emissions from farming, from manufacturing and production, from transport and distribution, and from packaging at a minimum. That we can also extend it and often can include your cooking emissions, your end of life and disposal as well. And, but the four that I said at the start, farming, processing, packaging, transport is the core of what we do. And the majority of the emissions for pretty much every food product we see is coming from the farming stage.

And what we also have then is quite a, an interconnected and global food system. So we see a lot of our clients, sourcing food from all over the globe, being two or three steps removed from their suppliers, or from the original farms, I should say. And given that's where the majority of the emissions lie, it really does lend itself to having a food-specific solution, because what we can do is build up a really comprehensive database of food emission factors, taken into account the very limited data that we can often get from our, from our clients, as in from food companies. But we can also build really targeted solutions to fill those gaps and to start really unlocking more primary data across the food sector. Maybe to bring this to life in a really, simple way. We work with restaurants and we work with brands.

And one of the common challenges, especially with so much new, novel, foods being introduced, was when a restaurant or catering provider started using a plant-based meat or a plant-based cheese, our key benefit, I guess, is the fact that we also work with a lot of brands. And that included some plant-based meats and some plant-based cheeses.

So rather than seeing these quite novel foods and then having to go away and spend a lot of time researching those ingredients and those foods, understanding supply chains, understanding recipes, we're actually able to leverage the data we're getting from some of our clients and make it available and use it in a more generalist way for our other clients.

And that was a real, challenge. value driver we're already finding for our clients, where because of our food sector specialism, we're able to unlock far more detailed and specific values, than maybe what your more agnostic sector, agnostic providers are able to offer.

Keith Anderson: And when you say food supply chain data, and I suppose we ought to focus on the farm since that's where it sounds like the bulk of the emissions originate. Are you looking at averages based on a particular crop or ingredient in a particular country? Are you actually working with your customer to engage their upstream suppliers and gather more information or primary data?

What does that look like in practice?

Matthew Isaacs: So we start off by having regional databases. So we have a database that is appropriate for European Union, for North America, et cetera. We then look to, our goal whenever we work with a client is to try and get an initial mapping or an initial assessment as quickly as possible. That's not necessarily to say that that data is going to be the final value, but one of the biggest challenges we face and we see is companies taking six or 12 months to get to the real insight or the real, kind of the value from this service, which ultimately is how can we use this data to drive change and reduction?

So we often recommend starting on a regional basis because you can get a high level mapping and also because the challenges of collecting data from suppliers and farms is really quite difficult. But once we've got an initial mapping, what that can do is we often have a conversation with our clients and say, well, here are the, here are the key ingredients that are, that we are identifying.

Those can be because it's the highest volume of product or sales, or because they're the highest emission ingredients, or, based on the data that we have, the foods which might have the highest variance, and maybe something like lettuce or flour are ingredients where the range of emissions is much lower.

Whereas via meats and dairies, it's likely that the range of emissions are much higher. therefore if we were to focus on one we would go for the latter rather than the former options. And then at that point, what we can do is start going down the supply chain. So we can engage, suppliers and they might be middle, middle range suppliers.

They might help unlock things like what country of origins the foods are coming from, or what regions the foods being coming, are coming from, which maybe isn't data that our clients might, as a starting point have available to them. And they might also be able to loop us in directly to the farms and the producers.

And ultimately if we want to get more specific data, we often say, we can do, we can do work modeling and mapping, based on secondary data, but really there's, there's not a substitute for that primary data at a farm level.

Keith Anderson: Makes a lot of sense. And it sounds like the focus is really on product- and menu item-level calculations. Is that correct? 

Matthew Isaacs: Yes and no. We are looking to get assessmentss for the individual ingredients that are brought in, but it, but increasingly we're working with our clients to help them on their net zero reporting. Here in European Union, we've got CSRD reporting coming in over the next two years, which is requiring larger organizations in particular to report their emissions on an annual basis and include that within their financial reporting.

And so increasingly we're finding ways with our clients to incorporate this data and convert it into a more traditional corporate reporting or, or, or as we might call it scope three emissions reporting, where we can offer some really granular data on the food side, which, because the emissions from food is often the largest contributions, for our customers as food companies, it's often where the most value is in having some really granular and detailed, data, which, which is exactly what our tool is built for.

Keith Anderson: Well, maybe that's a good segue to talking about the second component of the platform, which is the communication side and the labeling aspect. You know, it sounds like, listening to you, there's demand for really both use cases, and I'm sure they work well together, but are you finding that there's more demand from companies that want to produce those sort of corporate level reports to appease shareholders and, remain compliant with regulation, or, or possibly, and is it as much about keeping up with consumer interest in understanding what they're eating and shifting their own behavior the way you and your co-founder were thinking?

Matthew Isaacs: And is definitely the right answer there. And what we're seeing, we have some clients. Companies that have or want sustainability as a really core part of their brands or of their message, carbon labeling is really attractive because it's a really simple and crucially visual way that you can talk to your customers about carbon footprints. Actually we find the the biggest concern or, or, or, yeah, well, the biggest concern that companies often have when they come to us is what's going to happen if there's lots of e-ratings on their products or on their menus. But actually the data we're seeing is that the most effective campaigns or initiatives that we've got from clients are when they have a whole range and a whole spread of carbon labels and they use it as a conversation starter. They're able to talk to their customers about carbon footprints and the environment and really develop a strong brand image, frankly, on their, on sustainability.

and, and that educational piece is really, really strong in creating that bonds with, with companies. We're often seeing customers as well, not just use carbon labeling purely on products or on menus, but also as part of an impact report. Rather than necessarily putting it on all menus, often it's done in addition, but sometimes we just have clients taking some of their hero products and putting it within their impact reports with maybe some comparisons or impact statements, or putting it as a dedicated sustainability page, bringing out some of those, hero items.

And then probably my third and favorite example of what, what some companies are doing is they're going even further and they're aligning their promotions to the carbon labels and to low carbon products. So a really great example is a catering provider we work with here in the UK, they're part of Cambridge University down in college, catering.

And what they've done is they've taken the traditional buy 10, get one free. And we give our, all products or meals a rating from A to E, A being very low, E being very high. And what they've said is rather than buy 10, get one free, they've said buy 10 A rated meals and get one free. What this is, is a really, really powerful way of linking sustainability and, a low carbon activation or activity with a promotion and a reward.

And the response from students has been overwhelming in terms of the engagement that they've had and the ability to not just give a reward or like a feel good moment to them, but then actually linking that to sustainability, which for a lot of people increasingly is a, is a really key, key issue or point on mind, particularly in your younger generations. That's all on the consumer piece, but it is also worth noting that that reporting side, increasingly we're hearing companies talk to us and say, Our customers are asking us to report emissions on an annual basis. We've set a net zero goal or an SBTI submission, and we now need to find ways to reduce our emissions and then to report our progress on an annual basis.

And in particular, with these, these reporting requirements like CSRD coming in and over the next few, few years, it's something that companies are already starting to get on top of. And I think this is becoming a second avenue for us now where, where we can use our tool. And we've just launched a purchase report module.

We've just, we've just started, working with a lot more companies to do their full corporate assessments even. And, w e're seeing that with them, often the route goes the other way around, where we start in the corporate assessments, we start with maybe just, or even just focusing on emissions reporting for food, and we just take the scope three food emissions piece, and then maybe actually it's, we're starting to now see some of those clients go, actually, it's really interesting and useful for us to then convert that into a product assessment, put this onto their products, map the data again onto their products or onto their menu items, and then start communicating that as well. So it very much is a, an either an and/or rather than an either/or. 

Keith Anderson: Makes sense. And once you've got, in the case of a product-level assessment, I imagine there's value at different stages of the product life cycle. It's not purely what the shopper sees at the shelf or the point of consumption. You know, I think you mentioned before we started the conversation, there are clients of yours that are actually using that for new product development decisions.

Matthew Isaacs: Again, it's a, it is one of the things that gets me really excited and probably the anyone who asks me about carbon labeling is asking me, what is the impact that this has on on consumers? But as you say, and point to, we're actually seeing that carbon naming is just as if not more useful internally within food companies, especially, so, 

so for us again, that, that A to E rating that we use, we've developed that to just make it as easy for people to understand as possible.

A is very low, E is very high, A is green, C is amber, E is red. So it's simple traffic light colors, simple grading system. And what we've got some of our companies doing now is that during the NPD process, then that should becomes a three product shortlist often. And then, well, you start with a long list, three product shortlist, and then a final product and with, with some of our clients building solutions where we do a basic carbon assessment at the shortlist stage.

So at the point when they're reviewing those three products. They're not just having a table which has taste, cost and nutrition, but they also have a metric on carbon and on sustainability. And again, by putting that in that very simple A to E color ratings, they could have red, amber, green next to the products and it will help them choose which, it will help them make the decision. It's not to say that every product needs to be introduced to be the lowest carbon. It's just bringing out that data and allowing people to make those more informed decisions and, at an NPD stage. And then finally, also once the final product has been, developed, or chosen, sorry, there can then be a final review of saying, "well, can we make any small tweaks to this product that will keep it the same, but reduce the emissions slightly?" 

We've had some clients or seen some of our clients who maybe had a sprinkle of feta on the products and go, actually, we can remove that and not lose the basis of the products, but actually reduce the emissions by 30 percent and reduce costs.

And it's those kinds of, those kinds of, swaps or, or, or small changes that we can find that that, where there's a real opportunity to make some quick wins and quick emission reductions.

Keith Anderson: Jumping back for a second to the labeling approach, when you say high or low, is that relative to products within the same category? Is that, you know, what's the consideration set there?

Matthew Isaacs: So, we've made a decision pretty early on to use a single range and a single scale for all food products, well, all products, actually, not just food, food and drink, I should say. We're just focusing that in the food and beverage, sector, but the reason for that is because, ultimately, when we look at the spread of, emissions across different foods and across different products.

There can be, there's certain fundamentals and certain like high level principles that we see, which is that, what's more important is what food you're eating rather than say where it's coming from or how it's been produced as a general rule. That's one of the, the things that the data tells us.

So we thought it would be quite disingenuous to have ratings and an individual product rating and level, because it then doesn't communicate that there are some swaps that can be made, which more often than not, if not always, will be, will be true. Beef and lamb or red meats, for example, will pretty much always have a higher carbon footprint than white meats, your chickens and porks and turkeys, or other poultries.

That's true if you're looking at high carbon chicken versus low carbon beef. On the scales. And so for us, we felt it quite important to do that. And I guess as a final point as well, we, we looked at how nutrition labels are set and more often than not, they're using a single scale rather than a product led approach, particularly here in the UK and European Union, that's consistent across pretty much all nutrition scales.

So we didn't want to introduce something now, which likely wouldn't match what regulation looks like and in that sense wanted to give an open and genuine, rating to products from, from the start, rather than necessarily playing around with, with, with labeling within sectors.

Keith Anderson: Is your labeling standardized across customers? I know that you've got customers in North America and Europe. Some are food service, some are retail, some are brands. Are they all effectively on the same labeling scheme?

Matthew Isaacs: They are, yes, I guess one nuance is that our scheme is based on intensity. So we look at the emissions per kilogram of foods. We're aware that, for example, portion sizes in North America are generally slightly larger, than in,

Keith Anderson: That's diplomatic of you.

Matthew Isaacs: Okay.

Keith Anderson: Significantly larger.

Matthew Isaacs: But that, that isn't necessarily caught, in the changes. So it, what matters is the proportions and the core, maybe the proteins that are being used and those kind of pieces of what's being communicated more there. So there's some consideration there that, that it is somewhat comparable and, and, okay to use different, or the same metrics.

Also what, it makes a difference how we've set those ratings. So for example, our C rating was decided based on the global average emissions from the food sector today. And the, A rating is set based on the Lancet Commission's Planetary Health Diet, which is a global assessment of what does the emissions or the impact of the food sector need to be if we have a 10 billion population on Earth, i. e. what does a healthy and sustainable diet need to look like? Those are both globalized metrics and therefore it made sense to have a globalized carbon rating scheme.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

Hey, it's Keith Anderson from decarbonize.co inviting you to join our brand new Slack community for retail, e-commerce, and consumer product professionals that want to keep up with what's new, interesting, and actionable in industry, climate, and sustainability action, and connect with your peers. As I got into this work, one of the things that I found so invigorating is how passionate and willing to help everyone is.

But I haven't found a community composed of people across functions in the industry that are working in or want to work in climate and sustainability. And so we're launching the community to connect both sustainability experts and practitioners and people in conventional roles like product design, packaging, supply chain marketing, and merchandising to share their work, ask for help, connect about career opportunities, keep up with the latest industry development, and we'll be previewing who our upcoming guests on the podcast will be and giving you an opportunity to pose questions to our guests. So I can't wait to meet you and have you meet some of the other members of the community. To join us, you can visit decarbonize.co. You'll see a call to action on the homepage, or use the intelligence menu at the top of the page where you'll also see a link to join. 

 Makes sense. Well, Matthew, if people want to learn more about My Emissions or reach you, how should they get in touch?

Matthew Isaacs: So our website is myemissions.green and you can search "free food emissions calculator" and at least as far as I'm aware today, we should be appearing number one on Google as a simple free calculator that we have available on our website, where anyone can put in a recipe and see what the emissions of their products or recipes are.

Or you can email us at [email protected].

Keith Anderson: Fantastic. Well, thanks so much for joining us.

Matthew Isaacs: Thank you very much, Keith, for the time. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the decarbonizing commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of decarbonizing commerce.




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In this episode, you'll meet Ryan Lupberger, founder and CEO of Cleancult, a company making cleaning products that are better for you and better for the environment. Ryan shares his experiences and lessons learned from starting up to scaling up, discussing how to meet both retailers and consumers where they are in terms of education and behavior change, driving awareness with a different product form and unconventional packaging, as well as fundraising and other challenges.
Learn more about Ryan Lupberger:

• Link to Cleancult’s website
• Link to Ryan’s LinkedIn

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TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability.

Welcome to the Decarbonizing Commerce Podcast. I'm your host, Keith Anderson, and our guest this week is Ryan Lupberger, founder and CEO of Cleancult, a cleaning company with a focus on ingredients that are better for you and better for the planet and less wasteful packaging. And Cleancult is a brand that like many started in the direct to consumer channel, but has been expanding distribution in brick and mortar mass.

And it was really interesting to me to hear some of Ryan's experience and thinking about how to meet both retailers and consumers where they are in terms of education and behavior change as they're trying to drive awareness with a different product form and unconventional packaging, drive trial and change behavior.

So it's a very rich discussion. We also get into fundraising and other challenges of growing business in that category. So I'm eager for you to meet Ryan Lupberger, CEO and founder of Cleancult.

Ryan, good to see you. Thanks for joining us for the Decarbonizing Commerce podcast.

Ryan Lupberger: Thanks so much for having me today. Looking forward to it.

Keith Anderson: Why don't we kick things off just by learning a little bit about your background and the founding story of Cleancult? 

Ryan Lupberger: Yeah. So, personally I'm, I'm crunchy. I was, born in Boulder, Colorado. So grew up with a lifestyle of better for you, everything, better food, better products. We looked at every ingredient list and it was just frankly like, imbued in the lifestyle of, of where I grew up. And the parents are out there.

They, you know, were part of the Transcendental Meditation movement and, really also just prioritized wellness, right? So kind of grew up in this space, and then went totally different direction, right? So then went out actually to the East coast and went to a school called Babson, which is a entrepreneurial school focused on supporting big businesses, right?

And family business to investment banking to consulting. But when I was there, I looked at the back of my bottle of laundry detergent and this was 2016 and I didn't see any ingredients listed. And, you know, I was still a Boulder kid at the time and basically said, "this doesn't make sense. Why aren't there ingredients?"

There's ingredients on my food, on my shampoo, even. Why not our household cleaning products? So just at this big kind of aha moment, it was "why aren't some of the things we put on our skin, in our homes, and on our sheets, for example, regulated?" Right? So the more research I did to why there weren't ingredients, the crazier the industry became.

And in the US compared to the UK, we allow basically over 1, 400 ingredients that are banned overseas. So it's just a, it's a pretty nasty space and, you know, I think we've seen this massive movement of in me, organic food. On me, personal care products. But now it's finally happened around me, right? And like 3 percent of the weight of your clothes is actually leftover laundry detergent.

But people don't think about that every day. So the more research I did in this category, it was the more "wow." And, it always wanted to support businesses that could solve big problems. So we went down this whole big journey and 2016 to 2017, I looked at all the natural products in the whole category.

But they're all covered in plastic packaging, right? For me, it was how could the better brands out there be better if they use so much petroleum packaging? And I walked Target, Kroger, Walmart, and it's a sea of plastic, right? And it was just this big cognitive dissonance for me. So I took a big step back and said, we got to do something better.

And I tried dilutables, concentrates, powders, DIY vinegar. But it was all too complex, didn't really work that well, and we basically said there's nothing out there that works. So, you know, took a big step back and said, "could we deliver a better product with cleaner packaging, cleaner ingredients in a way that would meet shoppers and myself where they were?"

So we did. So we launched the first ever, soap cleaners and detergents in milk cartons instead of plastic bottles and launched officially in, Jan 1 of 2019, so it's almost been five years now.

Keith Anderson: Well, that's great background and context. And I didn't realize you were a Colorado guy. I grew up in Aurora. I grew up in Aurora and then went to Boston College. So not, not an identical trajectory, but sort of similar. Now, did you, did you say, silk detergent?

Ryan Lupberger: Laundry detergent. So, no, just my typical laundry. And we tried, again, everything under the sun, but you, you just see that big plastic jug. And just for me, it never made sense. And, you know, the more research you do in this history of this category, the crazier it becomes because, really in the last only 20 years, have we started selling and making cleaning products in plastic products, 40 years ago, it was mostly in powder in a box, right?

So this new plastic problem we have is literally originated in the last 20, 30, 40 years. So it's, we created a problem out of nowhere and now it's how do we get back to, frankly, where we were 30 years ago. So that's really what we're trying to, trying to innovate and create here at Cleancult.

Keith Anderson: So, I'm interested, maybe, in starting with the ingredient side, you know, you mentioned we are a little more permissive with product formulations and some of our peers abroad. How do you define clean at Cleancult?

Ryan Lupberger: Yep, so we have basically our no no list, right, that would align with a Whole Foods, a leading, you know, natural retailer. So that's a big, big piece that we follow. But we also try to look at ingredients that have less or no carbon impact on the whole, whole chain, right? So cleaning products typically now are all petroleum based.

So they come really effective. You know, that blue bottle that works really, really well, but it has some negative downstream effects, right? And those petroleum polymers that are made really clean very well. It goes after dirt, grime, all these different pieces, but they don't dissolve very well when they enter the waste stream or the waterways, right?

So. We have our no no list and our formulations are mostly based in coconut, so it's sodium colcosulfite, so just as effective as we believe the leading natural products, leading products generally, free from all the harsh chemicals, free from dyes, free from, really any phosphates, which are also caused with what's called eutrophication, in waterways, which means all the algae grows and it's really bad for, again, our different waterways, and then essential oils, right?

So our, our formulation philosophy here is it has to clean. Has to be ingredients you can generally pronounce, has to be plant based and better for you, and wholly biodegradable. So that's the formulations that we've, we've created here across hand soap, dish soap, all purpose, and laundry detergent.

Keith Anderson: And has that been consistent pretty much since the start or have you evolved it a bit over time?

Ryan Lupberger: We've evolved it a bit, like every brand. I think we're on formulation, iteration eight, or nine, like every brand. But what we really figured out is, in this whole journey is, really, we have to meet the shoppers where they are. And I know I'll probably repeat that multiple times a day. Because when we started this, we had prices that were over, frankly, the leading natural or better for you cleaning products in the market, right?

Even though we had a reduced waste package or plastic-free products, customers were not willing to switch en mass, right? So we built a big DTC business. We had some big fundraising rounds, but even with that, they wouldn't make the jump. And again, a small population would, but not the entire.

So from us, our big evolution was we knew we had to be clean in packaging. We knew we had to be clean ingredients. We need to be clean in efficacy, but we also needed to be the same price, right? So it's almost taken us five years to get here and now is when we're seeing the wave, right? Offering a better solution, but at a similar price point, it's really been the biggest unlock for us.

Keith Anderson: Yeah, I, I see a huge focus on product superiority on the one hand. Or parity, I suppose, and on the other hand, economic parity, you know. I think a lot of sustainable brands, however you define sustainability, are working hard to break through to the mainstream. You know, there's obviously a whole specialty channel and a lot of brands that have found their following with, you know, a sort of subscale population, but I think given the mission of a lot of brands, including yours, the focus is increasingly on "how do we reach the mass channels and start to change behaviors?"

Ryan Lupberger: Yep. Agreed. And you know, I think the exciting piece is the retailers want it too, right, is one of the reasons we'll be in most, if not all, marquee retailers, is because they're putting their money where their commitments are. So it's actually been very encouraging to see is you have, you know, Target, Kroger, Albertson, Safeway, and then the big strategics, you know, Lever, Henkel, Procter & Gamble, all putting these very aggressive 2025 plastics goals as well as ingredients, you know, through and through. And they're starting also now to talk about regenerative agriculture through their entire supply chain. So what we're seeing is, if there's a way to crack the economic piece, there is demand both from consumers and retailers to actually start to shift all these categories.

So it's been an encouraging time for us.

Keith Anderson: I'm glad that you mentioned some of the incumbents. I mean, there have been some, to your point, there have been some really interesting developments quite recently, although I remember going back almost a decade, most of the majors that you mentioned had either acquired somebody or done some experimentation that, you know, one might argue was sort of, tucked away until either the consumer or the retailer said, "okay, I'm ready." But, you know, it sounds like you're finding the retailers are, you know, eager to add selection that meets some of the characteristics that your products do.

What is the competitive dynamic like? Do you find this is, you know, growing the category, shifting the category? How do you think about the dynamic between some of those incumbents and a newer emerging brand?

Ryan Lupberger: Yeah. Well, it may be broadly, but to, 

one of the reasons we enjoy these conversations and again, appreciate you having us on today, is, it's going to come from consumers, right? The only reason that these big retailers and strategics are, have made these commitments is because Wall Street and/or their investors or direct consumers are forcing them to, right?

So one of the major big box stores just got really, frankly, criticized in the public markets because their plastic usage is increasing, right? And it was publicized, it was brought up on the earnings calls, so all of this is contingent on, like, you, the listeners, right? Without that, nothing's gonna happen.

That said, I think the retailers, you know, they're starting to shift. So, I will say generally, you know, cleaner products have a better margin profile for the retailers, but they don't move as fast. So, usually it's accretive, which is why they like this. It's usually a higher income shopper, too. So, one of, again, a larger retailer wants to attract this more. And I think what we're seeing in these categories is it's all incremental because you have massive organic food categories that have grown to be 10, 15, 20, 30 percent of overall grocery. Whereas cleaning is sub 3, sub 4, you know, it hasn't matched that. So, we think it's just room to run.

 It's one of the reasons, again, why I think the retailers are, so open to this.

And at what point does the fourth plastic natural cleaning brand move the needle, right? And what we've seen in this whole competitive dynamics, concentrates, dilutables, tablets, all these other form factors that have tried to reduce waste in the house of cleaning, they might work digitally because you can explain it to a shopper, they don't work in store.

So all of these retailers, it's a, it's a graveyard of closeouts for every reduced waste form factor that's tried to shift behavior. So again, what we're seeing is excitement. I think there's frankly limited competitive developments right now that are meeting shoppers where they're at the same price point and still reducing waste and some negative, negative chemicals.

So, but it's complex. It's hard. We've been at it for, you know, seven years. It's a hard space. 

Keith Anderson: Yeah its super interesting, though. I've never really heard or considered that point about

the importance of educating somebody on, you know, transitioning 

to a different, not purchase behavior, but usage behavior for the different form factors and, you know, a lot of the way I approach things is, is sort of through the spreadsheet side of things, thinking about, oh, you know, concentrated powders have, have less weight and less cubed, but I think what a lot of folks that have been entrepreneurs in the space for a long time have sort of come around to, not only with their own brands, but even B2B services, you know, focusing on what works is a way to accelerate impact more than letting perfect be the enemy of the good. And I think there's probably going to be demand for different form factors for different consumers and, scenarios.

Ryan Lupberger: Yep.

Keith Anderson: Are you finding.

Ryan Lupberger: tide lifts all ships too, right? Which is why you digitally certain form factors can win, in retail others can. And we all help solve this issue. So, yeah, we're supportive. Yeah.

Keith Anderson: You're finding that the retailers are increasingly adding distribution for cleaner products in these categories. Are you finding, you know, you mentioned the in store education component of it. Is that a necessity in your case? And are the retailers creating, you know, wayfinding and other opportunities to help shoppers find and consider the products or is that stuff that you still got to do independently? 

Ryan Lupberger: Yeah, you knoww, I think yes and no. You know, we'd always love more wayfinding with all of our partners, but I think the way we've designed this model is, how do we be so obvious that it does its education on shelf? Right? So originally we just had our milk carton and it was ingredient first. So it focused on our coconut based ingredients.

And frankly, it didn't work on shelf. There was a broad confusion of why and how and why is my cleaning products in a milk carton? So we spent two and a half years redesigning to solve for A, it's a cleaning product, B, this reduces waste, and C, it's premium. Right? And finally, we think we've nailed it, where there is no education on shelf.

Of course there's some, because no one's ever seen a milk carton in these categories, but it's like, I get it's a refill, I get it's less plastic, I get it's premium, I get it's better ingredients. Right? So, a lot of what we do is education on shelf, and it's taken, what, seven iterations also packaging to get here.

The other big piece we launched was the first filled and refillable aluminum bottles in the category. So when we started this brand, you know, five years ago, only refills. And we developed the technology, the intellectual property, and all of these pieces for the refills. But what we found is, even though we're winning amongst refills and cleaning, you have this whole ready to use that makes up 80, 90 percent of the category.

Like, you don't start with a refill. So I think the other big piece is we launched our aluminum bottles. And that was, you know, a, an intentional sustainability choice for us, because truthfully, we don't believe in single use aluminum being a better sustainable form factor. We believe in aluminum.

As opposed 

Keith Anderson: to what?

Ryan Lupberger: Frankly, single use plastic, single use glass is, aluminum is, it's just like the reusable bags.

If you're using a different reusable bag every time, it's a lot of carbon, right? It's, it's challenging to make. So, for

Keith Anderson: Reused is different than reusable.

Ryan Lupberger: Exactly, exactly. So, yeah, so we think we've cracked it, right? It is a filled and refillable aluminum bottle, right, that you refill using our cartons.

And when people see it on shelf, they get it. So I think, you know, again, it's, it's, we understand there's a lot of education to this, but we're trying to be the least amount of education in the space.

Keith Anderson: You know, how big of a factor is the conversation at retail... how big is refill in the conversation with retail? You know, do they view it as, a barrier?

Is it a driver? Do they think about some of the impacts it might have on loyalty and trip frequency and some of those things, building a basket? 

Ryan Lupberger: Yeah. I think that's the good news here.

In these categories, you refill and refilling, it's gaining a lot of momentum and it's, it's been around for a while, right? So hand soap refills today in the category represents, depending on your channel, about 30 percent of total sales. So it's, it's a lot, right?

And you think about even the big brands have big plastic tubs that you refill your hand soap. So, and that's growing at almost 12, 14, 15 percent annual growth rate. So it's, it's going very fast. Dish soap, it's about 20%. And people have gotten used to refilling their islands, right? In dish soap and that's growing quickly.

And with dish power spray, again, think about that blue bottle, there is a refill now. And frankly, the refill is, we believe a profitability play from one of the big strategics, because that big dish power sprayed trigger, it's very expensive, right, for them. But that said, it's still more sustainable, right?

So dish refills are now growing at a clip never seen before. All purpose, it's a challenging category in refilling, because people haven't much yet. But there's more and more development of dilutables, right? So it's not a little cartridge or two ounces, but it could be, you know, 32 ounces that makes 128 ounces added to water.

So we're seeing some movement there. And then laundry, you know, it's kind of the wild west right now because you're seeing sheets come into the market and completely disrupt liquids. You've seen pods come into the market. And our cartons are just direct dose, right? You just directly dose into your machine.

We're seeing these concentrated laundry detergents come out 32 ounces, and it's really gaining momentum. So, we believe, again, it's, there's a lot of support from, from retailers, again, potentially because of the margin profile and sustainability. But we think there's a lot of momentum across refilling right now.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience. Plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

You mentioned earlier, you know, you've raised some capital. At what stage in building the brand and the business was it clear that that was the path that you wanted to take?

Ryan Lupberger: For us, we had to. And you know, I think there's a case to be made for bootstrapping is, you know, you have freedom to do what you want to do and how you want to do, you know, there really was never a choice for us, fortunately or unfortunately, because our category is really hard. It's one of the reasons we're the first company in the world to do this.

You can't put a non-food product on a food machine. And in cartons, there's no non-food manufacturers, right? So, because of that, there's no contract manufacturers that can help you spin this up. So, we literally had to buy all of our own machinery in the early days, and start from scratch. So, we developed our own machines.

We customized our own machines. We have a lot of IPs, almost 15 patents, a bunch of trademarks. So, and it was expensive. In early days, 2019 to 2021, we had negative gross margins. We lost a lot of money because our floor was covered in soap because our curtains exploded and the bottom seal didn't work and, you know, the soap, when you run it through what's called a piston fill, it foams like crazy.

So we had to figure out how to put soap in a carton at speed without foaming. So early days, incredibly painful. We raised our Series B in August of 2021 and haven't raised since then. But until that point, it was essential, frankly, to raise a fair amount, to get this business off the ground.

Keith Anderson: And when you went looking for investors, were there sort of impact oriented investors that you were, searching for? How did you find your partners in the end?

Ryan Lupberger: Yeah, I think in the end, everyone wants to, to do something better for the world, right? But it's really hard if impact isn't connected to returns, right? So pure impact funds that have, you know, no focus on returns, we didn't find whatsoever, right. Is I think there are few and far between, but there are so beautiful harmony of funds that see opportunities in sustainability that also want to support the world.

And we don't think they're mutually exclusive. So our first, first investor was David Heath, the CEO of Bombus Socks. You know, they are on a crazy growth trajectory and he's a very smart CEO. And they're also, they've donated and changed quite a bit of policies related to homelessness, right? And also some of the donation structure nationwide.

So, that was both, right? You saw the opportunity and also saw the benefit. In the early days, again, the first two years of fundraising, 2016 to 2018, we couldn't get a dollar. We spun our wheels. We did three accelerator programs around the country because it was the only way we could get capital. We partnered with the National Science Foundation,

did a bunch of ingredient research for the national, basically, it's called the SBIR, grant funding. We did pitch competitions, like, you name it. We did it to get that scraped, basically, that first, let's call it, half a million to a million dollars to get this off the ground. It wasn't until we had this carton.

And the first meeting I brought this carton is that this is where we're going, this is what we want to do. And it was just an unlock. It's "why hasn't anyone done this before?" And we shortly found out why no one had done it before. It's brutal, it's challenging, it explodes, shelf life is hard, you name it.

But we did it, right? So After that, we went to, you know, kind of New York City angels. So we had only almost 40 investors in that round. Then we went kind of consumer funds in the late 2019. Then we had more of the growth trade side in 2021 and we've had a great experience, again, growing quickly, but also trying to change and like fundamentally transform this category.

So, we've had a really good relationship with our entire investor base.

Keith Anderson: That's great. What would you say that you're looking forward to most? You know, it could be something in, in the roadmap or, new innovation, or it could be regulation or something else.

Ryan Lupberger: I think both. I think you hit it, frankly, the nail on the head there. On the innovation side, we just launched, our first ever laundry sheets in the category. And it's a really exciting space for us because liquid represents about 80 percent of the category, right? You know, our cartons will continue to win there.

But monodose, pods, or sheets are growing like crazy. And you just have such an opportunity to compact formulations, but also get rid of so much plastic. So we just launched our new laundry sheets. So they are now on Amazon and will be the first laundry sheets in Walmart. That's all public information now.

It's the first multi enzyme laundry sheets in the market. So enzymes are very effective at removing stains. We found out how to put multi enzymes on the same sheet. So that's probably my, the innovation I'm most excited about, because no one's quite figured out how to put laundry sheets in retail, and we believe we have the best and first retail ready laundry sheet packaging, because again, similar story, there's a lot of big digital brands in laundry sheets.

But none in retail yet, right? And it's how do we kind of really create this space for us? And then on the regulation side, SB 54, we think it could change everything. So, no one quite knows what it is, or what it's going to do, or how it's going to be implemented, but it basically forces responsibility on to manufacturers, producers, and sellers, retailers, and brands for plastic.

And, you know, we think it could change the face of US consumption in these categories, but there's a lot of loopholes, and there's a lot of ifs, ands, and buts, and there's a lot of interpretation to be done. So, I think, again, a lot of excitement there, it passed in California, and will then work its way east, just out of necessity, because California is so big.

But we have no idea how it's going to play into the landscape, and I think that's going to be a big thing to watch for us. 

Keith Anderson: Yeah, it makes a lot of sense. I see,

both relating to plastic and packaging broadly, but, climate and sustainability broadly, California, I guess, New York to a lesser extent, and definitely Europe are really raising the bar. And, and I think. I've almost seen over the last two years, some folks getting really heartened to see all the activity and now I'm starting to see people say, "okay, a little too much stick.

We could use a little more carrot," or at least, you know, we need some decisiveness and consistency so that we have one standard we can go execute against.

Ryan Lupberger: Exactly. And we're at the, you know, packaging shows nationwide with some of the biggest producers. And even they don't know what's around the bend, right? So I think it's fair. I think regulation is important. I think incentives are important. But I think you're right. There does need to be some consistency because right now it's, it's, no one really knows what's, what it means.

Yeah.

Keith Anderson: Yeah. Yeah. I do think I share your view that consumers are ultimately the driver of a lot of these shifts. I do think, the second biggest motivating force in many cases, at least in the U S is competition and what some of the retailers are doing, not only with their nationally branded assortment, but you know, a few of the majors that you've already named are doing interesting stuff with their own labels.

And I think that is raising the bar in ways that, may accelerate things.

Well, if folks want to learn more about Cleancult or you, where would you send them?

Ryan Lupberger: You can find us on Amazon, Next Day Delivery, and we are the first, again, aluminum products now on the platform that you can price, same price as plastic products. Our website, Cleancult.com, and that's clean space cult. And then leading retailers, Albertsons, Kroger, Safeway, Walmart, all around you nationwide.

And, I think our, our biggest ask is advocate at the retailers, because those are who will make the decisions. And if you demand shifting these products and the retailer will have to shift these products. So we're, we're really hopeful and we see a lot of, you know, opportunity. And I think it's just the beginning for us and also the industry.

Keith Anderson: Well, thanks very much for joining us. Great to have you on the show.

Ryan Lupberger: Likewise. Thank you again for having me today. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=mn4j1z1n

This week's episode features Adhithi Aji, founder and CEO of Adrich, a smart packaging solution for connected e-commerce. Adrich takes some of the friction out of replenishing consumable products, helping overcome some of the challenge of changing behavior in the shift to more sustainable consumption models.

Tune in to hear more about how it plays a role in accelerating behavioral change in areas like refillable packaging, other use cases and possibilities, and the unit economics of new technologies in the connected packaging space.

Learn more about Adhithi Aji:

• Link to Adrich’s website
• Link to Adhithi’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

• https://decarbonize.co/member-benefits/ 👈

If you enjoyed this episode then please:

• Follow, rate, and review on Apple Podcasts
• Follow and rate on Spotify
  
  

Learn more about Decarbonizing Commerce at decarbonize.co

TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

I'm Keith Anderson. This is the Decarbonizing Commerce podcast. Thanks for listening. This week's guest is Adhithi Aji, who's founder and CEO of a company called Adrich, which is smart packaging for connected e-commerce. And I had to spend a little time on the website and with Adhithi to understand what smart packaging for e-commerce is all about.

But the more I learned, the more intrigued that I was, because, you know, we've had a few conversations already about the role of refillable and reusable packaging, both on the consumer side and backstage in internal logistics. And one of the big themes of the conversation we had with Mike Newman of Returnity, if you caught that episode, is behavioral change is really challenging.

And even when somebody has an intent to make a choice as a consumer that is maybe more sustainable, inertia and habit play a big role in preserving the status quo, and so I won't steal Adhithi's thunder about how Adrich does what it does, but it takes some of the friction out and effectively automates some of the work of replenishing a consumable product that you might want to reorder and refill packaging with.

And so in our conversation, we certainly got to know a bit more about Adhithi and where Adrich comes from, how it works, how it plays a role in accelerating behavioral change in areas like refillable packaging. But we talk about other use cases and possibilities. I'm always curious about the unit economics of new technologies like this, and we covered that.

We talked about some of the categories where it's a better fit than others and much more. So, I think you'll enjoy meeting and learning from Adhithi Aji of Adrich. 

Adhithi, thanks for joining the Decarbonizing Commerce podcast.

Adhithi Aji: Hi, Keith. Thanks for having me here. Excited to talk more.

Keith Anderson: Well, so am I. You know, I discovered your company a few months ago, and the website has a lot of words that were interesting to me. You know, you characterize what you're doing at Adrich as Connected E-commerce, I thought maybe just to contextualize things for listeners, we could start with, you telling us what is Adrich exactly and how did you end up starting the company?

Adhithi Aji: Sure thing. 

So, Adrich is a smart packaging enabled e-commerce, and connected e-commerce solution in that it has a hardware, which is a smart label, that tracks consumption of each individual unit of product in terms of the volume remaining. And, it has sensor-based smart labels and smart in the true sense that it's not RFID, it is not a QR code, but it's a sensor-enable label that tracks volume remaining and auto reorders automatically for the consumer or end user without having them to push a button or scan or do anything. And when they're down to 20% it detects that, it reorders, and it routes it to any e-commerce platform. So for you as a consumer, the next time you run out of coffee or shampoo, you'll find one at the door.

And for the brands and retailers, it's really about increasing consumer lifetime value and improving the subscription programs that we have today. Because today, consumers, when they run out or when they opt in for subscribe and save or any such programs, you either get more product than you need or you run out earlier.

And that is not very fun because they charge your credit card. We changed that to individual consumption based subscription, which means you'll get the next product only when you run out. Not early, not too late. 

And that way brands are reducing the churn from the subscription programs as well.

Keith Anderson: I'm smiling because I have somewhere around a half dozen subscriptions that either get paused or a month gets skipped as we end up having a surplus and then we end up going a few weeks without, and you know, when, when I was getting to know your platform, it reminded me certainly of subscribe and save type programs and also of the dash replenishment button and dash replenishment service that Amazon introduced and has now sort of retired and rolled into Alexa.

But I remember in, in both of those implementations, the idea was almost an extension of one click ordering for replenishable products to, again, reduce some of the friction of, getting what you needed again, right when you need it. And so, both from a commercial and a customer behavior point of view, this is a really interesting idea.

 

Adhithi Aji: Right? On the note of the dash button, right, so we are integrated with Amazon on Alexa now, so think of it as the advanced version of the dash button. I think one challenge, with the dash button was, that consumers had to have these buttons all over their homes. And, an interesting, learning from that dash button was the kids were going on pressing the button because it was fun.

And they'd just keep ordering, right? So the parents got a whole bunch of products. So, we're in fact working with Amazon to kind of introduce this as an advanced version of the dash button where it's zero touch. You don't even have to push a button. It'll automatically detect you're running out and auto reorder.

Keith Anderson: Got it. So, tell us a bit about how, how did you end up, you know, working on this problem and creating Adrich?

Adhithi Aji: Yeah, it's interesting. It started as a capstone project when I was studying in Carnegie Mellon. I did a master's specializing in innovation management, right? How do you bring high end research technologies to market? And, you know, during that time, came up with an idea. So I'm an electrical engineer by trade.

And also I have a supply chain management and MBA in that program. And, so the last mile data was sort of missing, right? There was a lot of data up until the retail store, but once the product leaves the store, it's sort of a black box. Brands don't know how consumers are using the product, how much they are now, are they using it once and throwing it in the trash?

That gap in that data set is probably why all the problems of supply chain, marketing, and in terms of inventory control, all of those problems stem from not having consumption data. So the idea, and honestly my passion circles, came together with electrical engineering and supply chain and product management in that our mission became to enable brand managers, retailers with usage and consumption data and that last mile data that could really empower them to build better products suited to consumer needs, make sure they get the right product to the right consumer at the right time. And for consumers, really, our days are so busy these days that we want some quality time and, just bringing convenience into the day to day life. That's really the key and doing that with sustainability in mind because we can enable this auto reordering for refills and not just single use plastic. And that way we are reducing reusing, re refilling, introducing refill and reducing single use plastics.

Keith Anderson: Well, I appreciate you handling that segue on my behalf. That was where I was going to lead the conversation next, because, you know, that's one of the clearest linkages, I think, to what you're doing and some of the goals and targets that a lot of, certainly big CPGs, but not just the big ones, have.

And as you and I were discussing, previously, the, the, a challenge, maybe the biggest challenge to several of these consumer facing refillable and reusable packaging initiatives has really been driving adoption and getting shoppers to, you know, be consistent in using the refillable packaging when the cost and convenience of single use, in addition to just being so widespread and more available, you know, the customer behavioral component is one of the bigger hurdles.

And so tell us more about what you've learned about how this kind of connected label can accelerate the behavioral change of using refillables.

Adhithi Aji: Sure thing. And Keith, honestly, I brought up the sustainability because that seems to be the top of mind for consumers, right? With environmental conditions changing, we've actually seen consumers becoming more cognizant of what they're using, how they're using it. And I think that's a big driver, market driver that, probably CPG retailers, all of them are, also seeing.

And that's a good news, right? I guess it's now about using technology to really help bridge the gap in communication between the brand retailers and the consumers because brands have a purpose of introducing refill to reduce single use plastic and communicating that to the consumers could go a long way in terms of changing the behavior.

We, in fact, are working with, Clorox, Unilever, Reckitt and the like across product categories to be able to introduce refill. And it could be refill at home or refill in stores. And how we're doing that is by embedding our smart labels. So I have a, example of a Clorox, which we worked as a pilot and, introducing this as a smart kit, a smart starter kit, which means we can even position it as a smart subscription program.

We just talked about how, you know, potentially subscriptions get you more products. So consumers opt into this as a starting point saying, "Hey, I don't get the next product until I need it." So that's great news. So they buy into this and, because it's smart, it creates a sense of IOT experience, so it already creates that elevated experience, so they create a one time setup, and then they forget about it, and you can see the label is embedded behind the bottle of Clorox, and this is a bottle for life.

Right? When they run out, it auto reorders refill, which is a diffuse pod, and consumers fill this with water, they diffuse it, and they're good to run out and do this whole thing again. So, by digitizing the system, we are detecting when they run out. But we also create a touchpoint to, to consumers and the brands to understand when they're refilling.

So it creates additional points of engagement, which one informs the consumer that, "hey, you're running out," you know, "you're getting your next refill is on its way," or you can prompt them as to where they can get refills. But more importantly, when they refill, you can encourage them because every time they refill, you can probably communicate the carbon credits that they are saving and empower them with a push notification or a text to be part of this whole ecosystem change and environmental change.

And I think that's very key in driving adoption because I think, you can also, once the digital link is created, you can communicate the brand purpose. You can communicate how they are helping with sustainability and broadly speaking, brands can also use the digital connection to drive the necessary behavioral change, by sending push notification and text automatically at different points of view.

Does that make sense?

Keith Anderson: It does make sense, and I encourage anybody, you know, some of the examples that Adhithi just shared are, you really have to see them to understand them, so I encourage you, visit YouTube, or we're now going to begin posting the videos to Spotify as well, but for those that are just listening, I just want to play back a little bit of what I observed so that if you can't see the examples, you sort of are able to follow everything that we just covered.

You know, the first thing that we looked at was a really elegant, sort of, smart, kit that was packaged in, in well branded packaging that did a couple things. You know, it, it emphasized, the smart connection that the package itself has and had instructions on how it works and also featured some of the environmental and likely other benefits of working with this package.

And then the second example was the refillable package itself and one of the concentrates. And, you know, maybe you can just take a moment, Adhithi, and describe how does the sensor that sits on the package itself work exactly and what are some of the contexts in which you've already demonstrated it accurately detects when it's time to reorder?

Adhithi Aji: Sure thing. So it, the sensor has three, the smart label, and we call it digital IoT label because it has sensors. It has three main sensors in it. One is a motion sensor, so, right off the bat, it detects only usage. So every time you spray or you pour a product or you scoop a product, so it only captures usages and it eliminates any false positives to get technical, basically, if you just move around the bottle or take it from the shelf on the kitchen counter, those data points are eliminated.

So, the motion sensor is used to eliminate, false positive and pick up only usages. Now, within that subset, we have, two other proprietary patented sensors on this label, and it, uses electromagnetic characteristics of the product. So, the label sends a pulse through the product from outside the packaging it takes, the reflection and takes the viscosity and the packaging type, so, whether it's a PET or a HTP and all of those material, characteristics, and determines whether there's product remaining or not. And that's how it uses some neural networks to actually determine volume remaining.

So, it's the same three sensors, whether it's going on a spray bottle or a bottle of spirits or a nutrition pills. The difference is that we calibrate those same sensors to simulate the type of usage, whether it's a pour or a spray or a scoop. And from there, with the viscosity of the product inside the packaging, we determine how much is remaining.

And then it talks Bluetooth, so anything in the home environment that talks Bluetooth, it could be a phone, it could be Alexa or a Google Home or it could be a smart refrigerator. So it's fully automated and then it comes to our cloud and we process it based on individual consumer patterns and it, once you run out, our cloud communicates to any other e-commerce and routes that order.

Now, all of this is done through opt in, right? So there is a one time setup that consumers will do and they know it's smart. So, everything is done with privacy compliance kept in mind.

Keith Anderson: My mind is headed in 10 different directions, so I have to, I have to pick one. What I'm really thinking about are, you know, the several use cases for a technology like this, and then the flip side of that topic is, well, what are the unit economics and how does it pay back, you know, why don't we start with the really fun stuff for a second, which is, what are the possibilities?

Because I think, you know, we've been talking about refillable packaging, which, as, as you've said, is a, it's a topic of growing interest, although it's a very small percentage of all packaging today. And again, part of the reason that I was so interested to learn more is the behavioral change component of what would have to be true for refill to take off at scale is a big part of why the industry is, is, studying it so carefully. But I also think about, you mentioned pills and the sort of compliance component, and that actually got me thinking about, first, refill is so interesting to the brands because it allows them to reduce or eliminate packaging waste, and as in the Clorox example you shared, a lot of refills are concentrated and therefore have less volume, they're lighter weight, which also translates to additional savings on the emissions front in addition to savings from producing less packaging.

But the waste component of the product itself is another one that I don't think we've discussed because I can imagine, you know, if you, if you have as you were describing the opportunities to communicate based on intelligence about the consumption pattern, you know, if you've got the expiry date for a product, I could imagine, I don't know what your pantry looks like.

Mine always has a box of snacks or cereal or something that's hidden that we've forgotten about. And again, just for the sake of the hypothetical and, you know, exploring what could be possible imagine every product in the pantry and every product in the fridge was equipped with this. I'm not saying it makes sense.

I'm simply saying, imagine you could notify me weeks ahead of, "hey, this cereal is going to likely be past its best by date three weeks from now, so maybe you want cereal for breakfast." You know, food waste in particular, but waste in any category is another big topic. And there's so many interesting approaches to food waste.

This, this seems like an interesting possibility.

Adhithi Aji: Yeah, to that point, yes, it opens up a lot of use cases for the consumers as well, you know, to your point, food wastage is huge and, also making it still lifestyle inclusive for the consumers, right? Today, probably you're storing cereals on a, in a airtight container. You're storing pet food in a container.

So brands could probably, give some additional containers that are co-branded with our smart label and the consumers can store it in that. And then it still creates a digital communication where you can communicate the expiry dates and how fresh, you know, in case of coffee, how fresh it is. And, more importantly for consumers, they now have a refillable container that's smart, that'll auto reorder, and brands can ship a recyclable package that they can refill.

So that is one area of still getting sustainability into the market, but keeping it lifestyle inclusive while giving additional, value to the consumer. So, expiry is being one, in case of nutrition and beauty, compliance or regimen building. So if you have to take vitamin two times a day, just make it a smart digital assistance around them to just nudge them on friendly reminders. You know, for beauty, if it's a night cream, you know, just a friendly reminder to be, to create those habits.

So that's in the high involvement category and in the low involvement, of course, like pet food and those, you don't want to run out in the middle of the night and it just... plain convenience, right? Just when you run out the next refill or refillable package shows up at the door. So there are ways to bring about sustainability, reduce food wastage, but the value equation remains with the consumer that will help drive adoption as well.

Because you are introducing new avenues in their existing behavior, not necessarily changing the entire lifestyle. So there is a reusability with your single use packaging as of today, but bringing in the refill using smart bins as a concept.

Keith Anderson: And is that, is that being piloted in categories like pet food or anything today?

Adhithi Aji: Yes, pet food, coffee, those are categories that, we have been working in, have got some great results. We've seenn across categories on an average at least 20 to 30 percent increase in auto reorders because of the convenience factor. And because it auto reorders, brands are getting a increased lifetime value.

And we saw, incremental reorders from the same consumer up to 50 percent. So, because they don't run to the store and, and, try and buy some other product when they run out, you're able to, retain the consumers for a longer lifetime value and at the same time increase your, top line with incremental orders per consumer.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

Well, if folks want to learn more about the capability or get in touch with you, how should they find you?

Adhithi Aji: Yeah, I'm, of course, very approachable on LinkedIn, you know, it's, just a text message there, or I'm also available through our website, and our email is [email protected] so, certainly, email, very accessible, but more than happy to collaborate and talk more about what we are seeing in the industry.

I think they're very positive market drivers to take sustainability to the next level along with subscription business model for CPG.

Keith Anderson: Well, Adhithi, thanks so much for joining me.

Adhithi Aji: So thank you. Thanks for having me. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the decarbonizing commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of decarbonizing commerce.Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=08j434v8

Join Keith Anderson as he talks to an old friend, Chris Perry, CEO of Firstmovr. He is not only a trusted advisor to the industry, but he's been in house at world class brands like Reckitt, WellPet, and Kellogg's. Chris tells us about his perspective about some of the challenges that the industry that wants to make it a priority faces in reaching out and persuading colleagues in conventional commercial roles.


He also shares an interesting point of view on the impact of emerging brands and insurgents and how innovation can play a role in accelerating industry shifts, and talks about the importance of communication. The conversation closes with us thinking a little bit differently about strategy as it relates to sustainability and retail and CPG.

Learn more about Chris Perry:

• Link to Firstmovr’s website
• Link to Chris’ Perry’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

• https://decarbonize.co/member-benefits/ 👈

If you enjoyed this episode then please:

• Follow, rate, and review on Apple Podcasts
• Follow and rate on Spotify
  
  

Learn more about Decarbonizing Commerce at decarbonize.co

TRANSCRIPT BELOW:

DCC_Ep20_Chris Perry_YT

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Thanks for listening. This is the Decarbonizing Commerce Podcast. I am your host, Keith Anderson. This week's episode features an old friend, Chris Perry, who is the CEO of a training and education company called Firstmovr. And I've known Chris a long time, in fact, we even worked at a few of the same places, I guess one of the same places, but in contrast to me, he's got experience not only as a trusted advisor to the industry, but he's been in house at world class brands like Reckitt Benckiser, now just Reckitt, wellPet, and Kellogg's. And I wanted Chris to join me to tell us a bit about his perspective as a non specialist in sustainability about some of the challenges and headwinds that the side of the industry that wants to make it a priority faces in reaching out and persuading colleagues in conventional commercial roles.

He has a really interesting point of view on the impact of emerging brands and insurgents and how innovation can play a role in accelerating industry shifts. He's got a great mind for branding and we talked a lot about the importance of communication, and we sort of closed out by thinking a little bit differently about strategy as it relates to sustainability and retail and CPG.

So, it was great to catch up with Chris and get his input, and I'm eager for you to meet and hear from him also. So, let's meet Chris Perry of Firstmovr. 

Chris, good to see you. Welcome to the Decarbonizing Commerce Podcast.

Chris Perry: Keith, thank you so much for having me.

Keith Anderson: Yeah, we've, we've known each other for years and years, sort of crossed paths directly and indirectly, but not everybody knows you as well as I do. So to kick it off, why don't you tell folks listening a bit about your background in CPG and what you're doing now at Firstmovr?

Chris Perry: You bet. So it, my, my career actually started in brand management at Reckitt long ago, it seems, if you, if we take e-commerce years into consideration, but back in 2010 and 11, there were these opportunities, projects as if they were going to end one day to get into e-commerce in the early days of CPG.

And, like a true, true. Change agent or nerd, as some people would probably call me, I volunteered as tribute into that and really found my home in trying to drive change for what, and for some categories is still a small part of the business, but the majority of growth and the majority of the influence sales and impact on the market.

And then took my, my career from Reckitt to, you know, helping build the team there and center of excellence there for several years to Wellness Pet Company. Then actually ended up going to Kellogg's and then ended up essentially, and where Keith and I, you know, you and I know each other so well is I had to fill your unusually large shoes, at what was originally Planet Retail Net Group or Planet Retail RNG.

And then became Edge by Essential and now is Flywheel and now acquired by Omnicom. So there's like, you know, the artist formerly known as going on and on and on. But, a long line of wonderful people that have led change even, even before I started leading change. And so, and then I got to spend some time leading executive education at Edge by Essential, where I found my passion for that.

And then during the pandemic, there was this huge opportunity for both virtual education for the, for the broader community, but also custom trainings and certifications and advisory for companies. And so one of my former colleagues, Oscar Kaszubski, who actually hired me at Kellogg's, was consulting at the time.

I saw an opportunity for the education. We paired up, and launched Firstmovr and now are what we like to call, you know, your omni partner for education and change management. So we do everything from public events that are free for leaders, you know, virtual events that are free for leaders to join any time on various strategies and key retailers to, again, custom programs for CPGs, agencies, and retailer audiences.

And a lot of advisory, temp services, project execution, really just trying to plug into centers of excellence or become the center of excellence for smaller teams that may not have that head count. So, and it's been a real ride for now four years and we're just excited about the next areas of change, including sustainability, which is a fun topic, but it's an imperative topic.

And one I'm, I'm excited that you're taking charge of as a true change agent here.

Keith Anderson: Well, Chris, of course, can't refer to the group he was part of as the RB mafia as I can, and it's a metaphor. It was all above board. But Chris was part of a team of folks who, you know, when he says they were in the early days of CPG commerce, I think that Reckitt team was probably the first organized team, you know, professionalizing the work of doing business with online grocers and selling CPG online. And basically everybody that I ever met from that cohort has gone on to do pretty interesting stuff. And Oscar was actually a guest on the last podcast that I hosted. And so, I'm glad that you're beating him to the punch this time.

Chris Perry: Hey, no, I, well, like I said, we nerds come from a long line of nerds. There's a legacy of nerdity, but, but what, what it's, it's a, it's a fun role to play because it's, it's an opportunity to truly challenge the status quo, get out ahead. It doesn't mean you have all the right answers, but you're not afraid to fail many, many times and then hopefully find the successful path forward that then everybody else can leverage.

And whether they remember you or not is not the point. It's that you felt good knowing you made that impact along the way.

Keith Anderson: Well said. So, you know, when you and I were, comparing notes about how to approach the conversation, I think we both see the commonality of a force of change in the industry that sort of starts small, but has outsized impact and implications. And, you know, I'm sure we'll spend a little time on that, but one thing that I thought was interesting about your thinking was you sort of started with the challenges and the headwinds.

And so maybe we can start the conversation there because I definitely find a lot of the conventional wisdom, where there is any, you know, when I, when I tell people what I'm working on or tell them what I'm covering, you know, a lot of people either sort of are shocked that anyone is focused on it, or sort of have some pity.

So, you know, tell me in your view, you know, why is the headwind and the challenge of working in this area top of mind?

Chris Perry: So, and I'll, and I'll disclaim it by all means, cause I know we have fans of, and, you know, change agents for sustainability across the board coming from different angles, but I do believe sustainability is a, not only an amazing opportunity, but also an imperative imperative and the right thing to do, right for mother earth or whatever, however, however, however much of a tree hugger you want to articulate yourself to be, 

sustainability is very, very important. That being said, though, knowing that we have a lot of leadership, you know, of all levels trying to decide when and where and whether to lean into sustainability, I think sometimes it's helpful to talk about the challenges and the headwinds first, because that's what really motivates most people to change. Unfortunately, here therelots of opportunities in this world. E-commerce was an opportunity, and when framed that way, I often, and I learned a lot over my years of storytelling, when talking about and cheerleading this awesome opportunity, e-commerce was often compared to, I kid you not, to like a pallet skirt at Costco or Sam's Club, you know, it was like, or, or a rollback at Walmart.

And you're like, "no, no, no, those aren't the same things." Yes, in the short term, the sales size might be the same from the lift that you get from those, but one is the future of your business and whether you have one. And the other one is whether you got 20 percent upside in the quarter.

 Right. And so, but, but I realized at the time when framed as an opportunity, it couldn't be considered any more than the other opportunities where an imperative is a little bit different.

And so this isn't about scaring or, you know, you know, just trying to create fear. And I don't want to be the boy who cried wolf, but the fact of the matter is, like with e-commerce as an entire channel, quote unquote, evolving and disrupting the space, the wolf is here, it's eating your lunch, and then it's going to need another meal, and whether that meal is you, or another thing you fed it because you got out ahead of preparing the meals the wolf wants, we need to get out ahead of this. But by all means, it is an opportunity, and it's an important thing to be doing for shoppers, for retailers, for the environment, but, you know, and Keith, I know you're seeing a lot of this too, but we are at a place where arguably And this is early, early days now, but there are some major retailers who are actively elevating brands, whether it be through badging or merchandising or, or other, other tactical placements, they are elevating brands that already meet those needs, are already serving more sustainable goals and initiatives. We've got shoppers actively looking for those. So when those are elevated, they see them and then they connect and that aligns. But then in the case, and I'm not picking on any retailers because some of these are really amazing initiatives. So I'm glad they're doing it.

But like Target Forward is a great example of one where the first pillar in their priority strategies is to elevate, yes, but also design sustainable brands. So in the absence of a brand doing it for them, who partnered with them for the last 30, 40 years, they will design them in their stead, and that will take a place on the shelf.

So before we even get into other third party competition that challenger brands, the retailers are looking to do this so that they can hit their own sustainability goals. So there is a little bit of a, of, of a, a risk of not being left behind, but not even existing on a shelf. and you and I both know the digital shelf is shrinking because we don't even necessarily see but the top row or the first few in on a mobile device, and that's before AI might replace the search results all together with just a recommendation. And who's to say that the AI doesn't say, "Hey, you know what? I want to predictively control the choices to help," you know, if we think about how Skynet and all these wonderful AI, you know, AI inspired movies tried to control for human error and poor human decision making.

Who's to say AI wouldn't just recommend sustainable brands too? So, there's a, some of this might be silly things that you think, well, I don't need to worry about that today. You may not have to worry about it in 2024, but if we don't lay the groundwork today, in 2026, you might not even be on page one, recommended by AI, at the retailer altogether.

And so there is this, there's this, true sales imperative, which I hate to think is the most important thing for us, but as commercial leaders, we do have to care because that's our business.

Keith Anderson: Yeah, and some of the things that you mentioned, I think are, at least in certain categories, already a factor. I mean, one of the things as I started really studying what the retailers were doing in this broad area, what I noticed was, to your point, that they are raising the bar with their own labels.

If you look at whatever targets they've set in areas like climate and packaging waste and, you know, even things like biodiversity, almost any of their climate and environment objectives, they're setting more aggressive targets and making progress more quickly for their own labels. And to your point, you know, they're, they're filling slots in their assortment, with options that they own and, you know, not always, but in some cases giving their own brands preference preferential shelf presence. And

Chris Perry: and the, I don't want to say the worst part because this isn't against them, but private brands in a digital omni environment, where again, even if I buy in store, my, my omni journey started online and often on a retailer's site, private brands or exclusive brands aren't sitting next to your products like they used to in store as a comparison, they are sitting in front of, because they bump you down or to the point that you don't exist. I mean, I, these are long term industry stats, but knowing some of our sustainability folks out there might not have heard these before, you know, it, 64 percent of Amazon clicks go through the top three search results. 70 percent of sales on Instacart go through the top row of search results, right?

So arguably, you know, the sad joke is, you know, you can hide a dead body on page two of a retailer's site because nobody goes there, but irrespective of what your proposition is, if you're not winning you don't exist. And so, but what will naturally win will be things that shoppers are seeking. What will be helped along and accelerated will be the things the retailers are promoting and elevating.

And to your point, Keith, you know, retailers are happy to, there's a, there's also a wonderful margin play in there for private brands. If you can create one that isn't just a cheap copycat version of the other brand, but it's actually a better proposition because it does, it does the functional benefit and it's got an emotional sustainable side to it as well.

And obviously we know sustainability, obviously, can go even beyond, there's the social sustainable side of things too, you know, around causes and charity and local sourcing and other things that help the workforces, you know, of our countries and markets and small farms and other things depending on what category you're on.

So sustainability can mean many things beyond obviously the environmental side, and all of those are being elevated and accelerated by the retailer for, again, their sustainability benefits, their commercial benefits, and maybe the other imperative, and you and I were just talking about this just before we kicked this off, but it's the, it's the government imperatives too. Like, at some point, some of this is voluntary.

I'm getting out ahead of, or I'm getting out ahead of industry, you know, best practices or benchmarks, you know, of setting like the 2050 or the 2040 versus 2050 goals or things like that. But what happens when the government step in and say, "Hey, companies need to take a more proactive step," like something is going to light the fire under retailers who are already doing a lot and under those who aren't doing anything.

And when that happens, I would hate for a lot of these wonderful brands that, you know, you and I've worked with for years to be on the back foot, you know, trying, trying to respond to it. And again, the hard part is a lot of the leadership that we've worked with aren't the ones who, who are like actually driving the full ship.

So it's not something, it's not a matter of will or interest. It's whether I can get the entire bureaucratic organization to pivot on a dime. "Why, why do we need to pivot on a dime? Why can't we pivot on a really large, silver dollar or something?" You know, with that analogy, if we can get out ahead of it and turn more slowly, but, but more thoughtfully and then, you know, correct our course over time.

Keith Anderson: Yeah, yeah. And I think a lot of what I see happening, particularly at the large, what I call incumbent CPGs is, you know, they, they are looking for ways, I suppose, at the margins to make those incremental changes. As many of them, and the retailers even more so, are the first to tell, you at their scale the absolute impact of some of those changes is pretty profound and it gives them, you know, helps them buy a little time to find a way to, make some of the more fundamental transformational change they're going to have to make over the next decade or two.

Chris Perry: One thing that's always interesting to me, Keith, and this is, and I, and I'm originally a marketer, but I will tell you that Reckitt forced every marketer to become a P&L expert. So I'm really dangerous. And I, my finance analyst used to like, not, it was like, Oh, well, Chris is working on that, so he had taken all those courses at Reckitt made a stake on our P&Ls, but, I got really good at it, but I'm not perfect, but I'm good at it. But my, the one challenge I have is that this, there's this general immediate fear of like dilutive investment.

It was like, "Oh, e-commerce is dilutive, right?" Okay. Well, well, sure. Sure it is on day one when you actually put money for it. Like, and it didn't help that in the early days of e-commerce, if we, if we go back a little bit to one of those first waves of change that e-commerce was like just growing because of distribution, right?

"Hey, I got on Amazon and I started to grow, but then suddenly, and it was a creative until I had to invest to keep growing because everyone else got distribution too. Well, now, well, now that everybody has content, now we need to do media. Now we need to do search. Now we need to develop e-packs. Now..." like, once you actually have to put real money into it, yes, there is going to be a period of like, like with any startup or, or new, you know, if you were launching in China for the first time, the first few years might be in the red or like with a glide path to profitability, but you have to look at like the life cycle of the investment.

And again, some, some folks out there who are investing in packaging, you know, for, for sustainability or, or econ packaging, even if it's not sustainable, might be able to say, "Oh, Chris, you know, I've actually already looked at this and there's never going to be a time when we actually get back to, like..." you might know better on that one specific piece, but on a, on a whole, though, we almost have to look at it like, if I was trying to drive trial on a product, I might try sampling. Well, sampling means me giving away product for free at no, no profit, right? Knowing that I'm going to get someone to try the product, use it, love it, hopefully share about it. But if not share about it, use it themselves and then buy at full retail price with some margin.

And then over time, my long term customer lifetime value is going to pay me back. We need to look at this that same way and I literally had talked with a, a team just a few months ago around like, well, the, you know, the E, EPAC packaging and the, you know, the SIOC, ships in own container type packaging, you know, is, is going to be really dilutive and you're like, well, yes, but like, that's because you're trying to retrofit your, your, your you're line internally that was used to doing it one way to a new way without actually activating any efficiencies. But if I know what most CPGs are really good at is figuring out efficiencies after they do something. So, like, I can tell you my first year as an assistant brand manager at Reckitt, I helped get rid of 72 inefficient SKUs in SKU rationalization efforts.

Like, like, we had a lot of... from a base business, we had a lot of rationalization and Reckitt was an already very lean organization with that same kind of rationalization efficiency thinking. So, to find 76 potential items that we could remove to make room for future innovation or renovation, that's going to happen, but you have to get over that initial hump.

And so, I'm not saying go and just splurge on, you know, every random sustainability thing that you can get your hands on, but so many things that we can do, and if we look at like a two year, three year, five year P&L, won't the ROI have been there because we still exist and have the right to sell anywhere, let alone, you know, in year one with status quo as, you know, with it just kind of starting to build up?

So It is funny. I feel like in some realms, companies look at like a glide path approach, but then in some areas they don't. And this is one of those areas where I feel like there's still this barrier to like, "well, we're never going to get efficiencies here. This is dilutive." Maybe on year one, but if you actually made a concerted effort to pivot here, this, you figure out ways to make this very efficient and actually very advantageous for you too.

So I think there's, but there may be some long term costs. I mean, everybody may have to compress their margins a little bit. But that might be the new norm, because we're doing the right thing for all parties involved.

Keith Anderson: Yeah, I think in some cases, and I'm glad you brought up SIOC, you know, in some cases you sort of have to annuitize the cost of the change over that longer term. But particularly when it's a retailer or, as is increasingly the case, a government mandate, it's not always a phased approach. You know, a lot of cases, the band aid gets ripped and, a switch is flipped.

So, you know, to your point, those are, I think, for many companies, the more painful because it does have a fairly immediate impact that takes time to adapt around. But I also think you're right. Big companies are very skilled at wringing efficiency out of those kinds of transitions. And I think you see more of them working with each other to help influence the legislation and in areas like extended producer responsibility and deposit return schemes.

Those are both sort of packaging focused, but especially in Europe, packaging is getting a lot of attention at the moment. You know, the lobbying effort is as much about clarity and consistency in many cases as it is "please don't do this." You know, a lot of what I think is creating complexity at the moment is from market to market standards are really inconsistent, and so, particularly for the big multinationals, it's getting increasingly challenging to stay in compliance, you know, globally. You know, I think the other, the other interesting thing that, we haven't really hit on, but it's sort of the flip side of the incumbency coin is there are a lot of emerging brands that have the advantage of designing business model and a product and packaging, you name it, from the future back.

And we've sort of seen what competition looks like in the early days of digital commerce growing, you know, there were companies from the beginning that were launching digital first, if not digital exclusive and growing, you know. How do you see that dynamic playing out today between brands that are being founded and funded in 2024, and the interplay of how they compete with some of the, you know, century old brands?

Chris Perry: So, it's interesting, and, again, like, you can double click into all of these, but, we've got... digital lowers the barrier to entry for everyone in general, because obviously, Keith, you and I, if we had a product we could sell, even if it was handmade goods on Etsy, we can start a shop and start selling them, right?

Like, I mean, now, are we going to be successful overnight organically without pain to be seen breaking through the clutter? No, I mean, we're going to have to do all the normal marketing things. And, you know, commercialization and go to market strategy, the smarter we are about how we bring that to market, the faster we might be able to crack the code.

And sometimes you get that like luck of the one hit wonder where something just hit right on the trend, or you got picked up by the right influencer without even meaning to. But digital lowers the barrier to entry because of the third party marketplace, because of D2C, because of social commerce, and so, but no matter where any one of those channels is, right?

Like we've seen a lot of D2C. D2C was like this hot topic. Everyone needed to have it. But then a lot of people did it poorly or didn't understand how to differentiate what they were doing in D2C versus if it was a big company versus what they were doing with the rest of the market. So they didn't figure out their unique value propositions or, you know, we saw obviously some of these D2Cs got really big valuations and big CPG bought them and then didn't know how to do it.

They just used their old, dusted off their old playbook and said, "we're going to distribute you everywhere," but then didn't figure out how to make sure they differentiate, what was online only versus, you know, with them versus what they were selling, you know, broadly in, in other retail channels. And so.

Whether D2C is the, like, is a large part of the CPG's portfolio or not, D2C, social commerce, and even the 3P marketplace, are platforms for incubating, right, potential exclusives, new innovations, testing things, by all means, they might end up becoming really meaningful, I mean, when you think of, like, you know, Lego and Keurig and, you know, you've got some big companies that have some really meaty D2C businesses, and they use those obviously for brand building, for marketing and content and, you know, innovation testing for loyalty plays of giving their loyalists, you know, early access.

I mean, they're getting insights. They can already prove things and then go to a Walmart and say, "Hey, I already have something that's proven 90 percent of my, my loyalists love this, and it already serves these five benefits versus the traditional products." So they've got like, and I'm not just picking on those companies, but, but companies with established D2C or any other platforms as an incubation platform become really interesting. So those channels obviously offer challenger brands a way to make the case for not only their brands, but the sustainability movement. And to your point before, I don't think that goes unnoticed to other retailers who are looking at the trends or looking at the, what, what, that's why a lot of those, you know, Target and Walmart have invited so many digitally native brands and many of which are sustainable or more thoughtful to the environment or social causes than the traditional brands.

So I do think the challenger brands, they might not be big overnight, in a way that like would be noticeable. They're not going to pop up and completely disrupt your share within a month, but they could within a year or two years or three years. And again, it's not a matter of you not being on that Amazon shelf.

It's that you don't exist to them. You're not, you don't have, you have no share of mind because you're not at eye level and then you're not at, you know, smart speaker recommendation level or AI assisted, you know, Rufus, you know, Amazon Rufus, your recommendation level, because you're not meeting maybe like table stake needs that, and again, we don't know what AI, like I only bring up AI because aI is both has a positive side from a personalization, but it also has a very disruptive side from a, I don't know what's in that black box, and I don't know what determines what is recommended for Keith when Keith starts typing in, and I don't know what, I don't know what may be like the foundational bias, and I don't use bias in a bad way, it could be a positive bias, right?

Like, "only recommend things that are really good for the environment that also meet the shopper's needs." Right? Who's to say that doesn't fall into it somewhere. If the retailers are initiating these search engine optimizations that don't favor things that qualify, they might then be the only recommendation you get.

So, so brands that proactively design themselves to be that way and get over that, challenger brands have that benefit because that's their only route to market. But the big companies almost don't treat this as an innovation. You said one other thing a minute ago, that was really important. It, for some reason, when we launch innovation at a big CPG, we're willing to overspend upfront on that amazing quality.

And then rationalize it very quickly after. I was literally part of that myself. We launched with the best packaging. It was the, you know, the foil packaging that shines off the shelf. It was embossed. It was great. Like we spent extra on all this and literally as soon as it launched, then it was the rationalization team was on how can we cut, how can we squeeze the product?

So the funny thing is we're really good at squeezing, but we're also okay with launching unusual quality. At a minimum, I'd like to say, let's just keep quality, but either way, why don't we approach it with that same mindset? Like treat this as an innovation. That's the right thing to do. It's on shopper trend.

It's on retailer trend. It has massive implications long term if we do or don't do it, not to mention against competition. And yes, there will be ways to squeeze it later, but the squeezing will be off the right base because we're already going to be, we're not going to squeeze it by making it less sustainable.

You know, we're going to... Most of the squeezing was removing packaging. So it'd be a way to make the packaging even more sustainable, if you will. So I think there's just, it's a mindset shift, and knowing like how many times do we have to see a change that started small, that even when it's still small for some categories, actually is really big in terms of share of growth, share of influenced growth, share of, even share of mind with the retailer who is making decisions about what they carry anywhere.

In store and online based on what is winning, and winning will be defined by whether you've done some of this as well.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

 Well, Chris, what, what a high energy and fascinating conversation. I know that there are going to be folks that are going to want to hear more from you. Where would you point folks that want to get to know you or Firstmovr better?

Chris Perry: If you want to reach out to me directly and get the same level of high energy, because I'm naturally caffeinated. I do not drink coffee. You can reach out to me at [email protected] and Firstmovr doesn't have an E in it because technically there's no E in e-commerce because it should be just commerce.

And we should come up with something cool for sustainability, for that long term as well. But, I invite all of you out there to any of our upcoming events, you can find all of them at firstmovr.com/events. We have events again on every type of strategy, every type, all leading retailers.

They're all free. They will stay free. They're virtual. They can fit your schedule. You can obviously go back and watch them on demand. And we bring, we really source the best quality. We're hoping to get Keith on to several of our events so that we can maintain our top quality, you know, thought leaders in all these different areas.

But we would love to have you and you can obviously engage us there. And we host a lot of great speakers from the brand, agency, solution provider, retailer side, to speak to the next level strategies for those areas. So we'd love to have you join us. And if we can help you further, we're, you know, you can reach out to us about ways we can collaborate more custom, in a more customized manner.

Keith Anderson: Awesome. Well, thank you, Chris, for joining us.

Chris Perry: Thank you so much. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the decarbonizing commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of decarbonizing commerce. Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=qn02y5ln

Join Keith Anderson as he meets and learns from our guest this week, Autumn Fox, Climate Sustainability Senior Manager for Mars. Together they discuss the company’s roadmap to net zero emissions, looking at how far they’ve come and how they, and the rest of the industry, might continue to move forward. Together they touch on plans that affect agriculture, retail, packaging, and logistics.
Learn more about the Mars Net Zero Roadmap

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• Mars Pledges Fresh Climate Action to Achieve Net Zero Emissions Across Full... 

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TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

 This is the Decarbonizing Commerce podcast. I'm Keith Anderson. Thank you for listening. Last fall, the Mars Company published details of its Net Zero Roadmap, which is among the most ambitious decarbonization plans I've seen in the industry. Mars has a climate footprint, roughly equivalent to the country of Finland.

And they've already reduced emissions by 8 percent from a 2015 baseline, despite increasing sales within 60% over the same period. But their new net zero target is to reduce their full value chain emissions by half by 2030 versus the same 2015 baseline, and by 80% by 2050. They've committed a billion dollars over the next three years, and they estimate that it'll take roughly 1 percent of annual sales to get to that 50% reduction by 2030. And Mars is a food company, so as you might suspect, a huge percentage of the emissions reductions that are planned are in agriculture and land use, but some of their plans also affect retail, packaging, and logistics.

So, I was really excited when I had the opportunity to interview somebody from Mars that worked directly on the Net Zero Roadmap. And our guest this week is Autumn Fox, the Climate Sustainability Senior Manager for Mars, who, in her role, leads the climate and land impact areas for the Mars Sustainable in a Generation Plan.

Autumn has been with Mars for more than a decade in a variety of roles, sales, R&D, and commercial. She was previously a sustainable sourcing manager in the Mars Wrigley business, where she chaired the SAI platform, Sustainable Dairy Partnership, and Autumn has a background in biology and is a published author in ecology and cancer biology.

Like I say, I think this is a really great example of where the industry is ultimately headed and I was delighted to meet Autumn and learn from her. So let's meet Autumn Fox of Mars Incorporated. 

Autumn, we're recording on a Friday morning, so happy Friday, and thanks for joining the Decarbonizing Commerce podcast.

Autumn Fox: Thanks, Keith. Thank you for having me here today.

Keith Anderson: I've been very excited for this conversation and, I'm really excited to learn more about you and, and what Mars is doing in this area. You know, last fall, when the company published the Net Zero Roadmap, I was, I, I dug into the detail for longer than I expected to when I opened the PDF.

And so, I think it's going to be a really fascinating discussion for listeners. Maybe we can just start by, learning a bit about you and your journey to working on climate at Mars.

Autumn Fox: Yeah, I'm happy to share. So my journey to this started in college. Part of my biology degree was that I worked on a research study, and that study was looking at the effect of natural gas drilling out west in the US on elk and mule deer. And while I was out there, I was spending time in this relatively remote part of the US.

It looked very forested and natural, but what I learned was that it was dissected with all of the development and the roads to access the natural gas wells. And it was apparent that this was really a deeply impacted and fragmented landscape, and it created this interest that I have now in the overlap between business and ecology.

And I ended up at Mars. I've been here my whole career, essentially, but I've been in a variety of parts of the business. I've gotten to be in sales and work on the performance metrics of our sales team. I've gotten to be involved with our innovation project process. I've gotten to be involved with our innovation process in R&D and looking at how we procure sustainably for ingredients like our dairy, our tree nuts, our vanilla. And so all that then has brought me to this place now. I'm part of our corporate team on sustainability, and I lead our work on climate change, land use, and deforestation and conversion of natural systems.

Keith Anderson: I think that rotational experience in different parts of the company is, it's somewhat common in CPG companies from what I've seen, but I don't know how common it is in climate and sustainability. Is it something that you pursued, or is that something that the company does with intent?

Autumn Fox: You know, one of the things I love about Mars is that it's really focused on development and really gives some freedom for associates to chart their own path and really work through the career path that they're interested in. So I've had a lot of support over the years from my managers to keep developing.

I, I do think in Mars, at least we see a lot of this. We have a lot of people in sustainability who are coming, especially from procurement or R&D and bringing a lot of the skills that are needed to excel in those areas to work on sustainability issues.

Keith Anderson: It makes a ton of sense. I mean, that, that is, as we discussed briefly before we were recording, so much of our focus is at the intersection of all of these commercial decisions that impact both climate and commercial outcomes. And so I think it's really interesting and important to see that kind of cross pollination happening inside the business.

Well, I think the main topic for discussion today is the Net Zero Roadmap that I know you played a key role in helping develop. I imagine some folks listening aren't totally clear on what "net zero" means. So can you define it?

Autumn Fox: Absolutely. I know there's a lot of confusion out there on terms like "net zero" and "carbon neutral" or "climate positive." It's a real jungle right now. Net zero is a concept that, you know, really was defined by the United Nations and a group called the Science Based Targets Initiative. At its most basic, net zero means a balance between greenhouse gases that are emitted to the atmosphere and greenhouse gases that are removed from the atmosphere and stored somewhere.

That's at a global level, and we're pretty far from that, to be frank. At a company level, net zero means the same thing, but with a certain order of operations. So first, a company needs to dramatically reduce the emissions associated with their value chain on the order of 80% to 90% depending on the industry. Then once the company has really dramatically reduced their emissions, there's going to be some residual emissions that last 10 or 20%.

Those might be very difficult or impossible to, to stop. And so those can then be neutralized or offset using carbon removal credits.

Keith Anderson: Makes sense. And can you tell us about the Net Zero Roadmap and what some of the pillars of it are?

Autumn Fox: Absolutely. 

So, the Net Zero Roadmap is a publication that we put out last fall, after we had announced our commitment to cutting in half our emissions by 2030 and achieving net zero by 2050. And in the roadmap, we're really laying out our plan to 2030 in a fair amount of detail, and we've done a lot of analysis to support this, to assure our business leaders that this is the right choice to make.

And the great news is that we found that cutting our emissions in half by 2030 is achievable. We can do it. The solutions are available, they're ready to be deployed, and we really just need to deploy them at scale in our supply chain. The other thing that we found is actually that it's also affordable.

It'll cost us, we think, about 1 percent of sales annually. And I know that perhaps could be debatable whether that is affordable or not, but when we think about an investment to address the really most existential threat to our business and to our families, you know, that's pretty affordable. 

And what we're seeing is that actually there was a study recently, just this week I saw, a study in over 100 countries that found that 70% of people would be willing to percent, willing to spend 1 percent of their household income to stop climate change.

So, we really need to recognize that this is something we all. No is a, is a big threat and we need to just invest it to get it done and to change course. Now, when we think about our Net Zero Roadmap, we have a few fundamental concepts that are really important. The first one is that companies need to include all of the emissions associated with their value chains.

And that's because in the end, you know, it might be nice to exclude one bucket of emissions that's difficult to to address, but it doesn't work like that for the atmosphere. What matters to the atmosphere is what is actually emitted. And so we need to be including everything so that we can make strategies that truly do what's necessary to slow this down.

The second thing is that we need to have interim targets. Company committing to net zero by 2040 or 2050, that's so far away. Businesses act for the most part on much shorter, you know, year to multi year time frames. And so we have to have those five year targets to make sure that we're on track. And as we look at our targets, we need to think about performance.

That's what really matters, right? The atmosphere doesn't fundamentally care. If Mars has a GHG policy, it matters whether our emissions have actually gone down. And so we have to have a really laser focus on performance and actually reducing our emissions over time. At the same time, we have to think long term, right?

And in particular, that means thinking about decisions we're making now that lock us in to a certain emissions pathway. For example, if you're installing a new asset, a new piece of machinery at your factory, you know, typically those are going to have multi decade lifespans. And so you might be making a decision now that will affect your emissions profile in 2040 or 2050, and identifying those decisions and taking particular care with those decisions is, is really important.

And the final, you know, fundamental, that we have of net zero is this idea that once we get down to that small level of residual emissions, the last 10 or 20% that we can't really do anything about, in order to neutralize those with carbon credits, we really need to be focused on the quality of the carbon credits.

Of course, there have been a lot of challenges in carbon markets recently that have been quite public. And so looking at how to ensure that you're really procuring and supporting high quality carbon credits projects is, is absolutely vital.

Keith Anderson: There's a couple things that I want to drill down on there, but I think that's a super interesting overview. The first is, you know, I like the way you frame the sort of primacy of the atmosphere because you really can't work the ref or move the goalposts in a, in a topic like this, you know, I've, I've sort of been saying in some cases, the consumer is king, but, you know, sometimes laws of thermodynamics take precedence and, and I think that's something that many of us in business are still coming to accept because you know, for decades, we've been so singularly focused on, "well, if a consumer accepts it, then it works, and if they don't, then it doesn't."

And I think we're broadening our thinking.

Autumn Fox: So perhaps "physics is king" is your, your new catchphrase.

Keith Anderson: Yeah, I'm not known having pithy or memorable phrases, but I'm searching for something that I can

Autumn Fox: Well, let me know if you find it. But we, we really do try to bring that approach with the business. It's what "does the science say is necessary?" And we use that to set our environmental targets, not only on climate, but also on water and on land.

Keith Anderson (2): Yeah, it makes sense. And, you know, the second thing that I think is really important and I'm glad to see is, certainly you're focusing on the quality of offsets and credits, but the majority of what you're planning to achieve is actually reducing emissions in the value chain. And, you know, I know there are some major buckets of emissions that represent big percentages of full value chain emissions. Maybe we can start with agriculture, which you know, my read of the report suggests is probably the biggest. 

Autumn Fox: Agriculture is absolutely one of our biggest areas, and that's because for Mars, as, largely a food business, the footprint of the raw materials that we purchase, is, is over 60% of our footprint. And so it is the must win area. And in the short term, you know, the absolute top priority there has to be stopping deforestation and conversion of natural ecosystems.

This is crucial that any food company be taking action on this now. It has to happen this decade. And so to work on that, you know, we start with really tracing our supply chains. A step we call map. We've got to map back to the land where our product was sourced from. And then we need to look at "how do we manage and make sure that we are setting the expectations for our supply chains in terms of ensuring that they are on land that is, it's free of deforestation and conversion after a cutoff date?"

And finally, then we need to monitor to make sure that they remain compliant. But as we do this, you know, what we really see is that often we have to actually redesign our supply chains. Sometimes you can, you can apply it to your existing supply chain, but often you might find that the supply chain hasn't been designed with this kind of transparency and compliance in mind, and you need to take a different approach.

And one example where we've done that is in Palm, where a significant part of our volumes are traced from an innovative model where we, we really have, you know, a single plantation, a single mill, supplying us. Then beyond stopping deforestation, there's all the emissions that are associated with the agricultural value chain that includes, you know, producing fertilizer, it includes the emissions from the land, the emissions from the animals, the emissions from the farm operations, as well as then any emissions from logistics and processing.

So there's a broad swath of emissions, very diverse set of emissions that are in this category. And the way we're tackling that is largely through climate-smart agriculture. And the way we understand climate-smart agriculture is really that it has three pillars. One is reducing emissions across all of the sources of emissions and ensuring that you are protecting nature and regenerating soils and natural ecosystems.

And that's where sort of regenerative agriculture fits in. And finally, that you're working on resilience, recognizing that climate risks to supply chains and to farms are significant and working to increase the resilience of those supply chains. And so we, we tackle this in very different ways in different supply chains because they have really an incredible diversity of contexts, but it ranges everything from classic regen ag programs that are looking at things like no-till and cover crops to working with dairy farmers on how they manage their manure and to do that in a more sustainable way, to looking at how we improve the, the processing of the actual ingredients that we buy.

Keith Anderson: It's really interesting and, and there are, I think, a handful of other categories that are more directly chopper and, and retailer facing in some ways. Do you think that there could be implications for ways of working with retailers and consumers in some of the agricultural initiatives that are part of smart climate or climate-smart agriculture?

Autumn Fox: Yeah, absolutely. I mean, the first place to start is with your, your comment on the consumer being king, right? Absolutely. The consumer often has some interest in how the product that they're purchasing was produced, right? And so there's an opportunity from a sales and reputation perspective to engage with the consumer and to share with them the story of what we're doing in those supply chains and to really bring that to life for them.

Then the retailer can also have an interest in that because that creates a shared marketing opportunity and a way to grow the category. Right? But in addition to that, the retailer may also have some interest in partnering with us to, to work with the farmers because of their own goals and commitments and targets.

So, there's several ways that this could come to life with retailers and consumers.

Keith Anderson: Makes sense. What are some of those other major buckets? Obviously none quite as significant as agriculture, but still areas that the plan requires you to focus on.

Autumn Fox: So, related to agriculture is product formulation. And this is one of those things, very few things, that is in our direct control, right, so it's an enormous opportunity where our choices affect both the upstream footprint of the ingredients that we purchase, because we're choosing whether to buy beef or poultry or soy protein, and also the downstream footprint of how the consumer uses and disposes of our products.

And so to work on product formulation, I think first is important to note that it does require a fairly high level of data availability, right? We need to be able to give the product scientists the information they need to make effective decisions. It also requires a really excellent collaboration with the procurement team.

Because, you know, what ingredients are going to be in the product obviously affects how the procurement team prioritizes their work. And the ways that other raw materials will be improving in sustainability over time also affects how R&D thinks about what materials to put in and which not to. And so there needs to be a really strong collaboration between R&D and procurement teams to make this really come to life.

Keith Anderson (2): Speaking of R&D, and this may be out of your wheelhouse, but I think Mars just announced the opening of a new R&D facility in Chicago. Is that linked to this topic?

Autumn Fox: So, I'm based in Chicago. So, yes, happy to be very close to that. Yeah, so that's really about making sure that we have the right innovation support to be able to really do effective pilots of, of new products, and so that is you know, really making sure that we have the infrastructure to be able to effectively test as R&D is working on "how do we reformulate and how do we develop new products to make sure that we can pilot those effectively before we bring them to market?"

Keith Anderson: Yeah, I, I see a growing focus across the industry in product effectiveness and, you know, while we're all trying to improve the sustainability and reduce the footprint of products, making sure that we're giving the shopper and the consumer choices that they feel good about making, seems increasingly important. What about some of the other areas like packaging, retail, logistics?

Autumn Fox: So maybe we start with packaging because that's also very closely related to product formulation. 

Packaging is a great example of an area where we can't have climate tunnel vision. And I'm our climate lead and I'm saying this, right? The mentality we need to have is that we are part of nature and our lives are fully dependent on nature being healthy and vibrant.

And in the case of packaging, the impact on nature has to be the top priority, which means that our priority is to design packaging for recycling and reuse, which is also known as designing for circularity. And so that's what our packaging teams are really fully activated on right now. As you design for circularity, there are a variety of actions that you work on.

That can include redesigning the packaging to have fewer layers to make it more easy to recycle. And it includes innovating with new materials that are easier to recycle or compost. And it also includes working externally to scale up the recycling infrastructure that's needed to then actually recycle or compost or reuse those materials.

The great news is, in our analysis we have found that those actions to design for circularity, in aggregate, they do lead to reduce to... in aggregate, they do lead to reductions in our greenhouse gas footprint, which is excellent news. There is a synergy and we're driving for both together. 

But that won't be the end of the story on sustainable packaging.

Once we've moved to that circular packaging, then we need to get on with fully decarbonizing those packaging systems and doing all the work to make sure that those supply chains are, you know, are dramatically reducing their footprint as well. So it's really going to be a multi stage process in packaging, starting with designing for circularity.

Keith Anderson: It's interesting how many of these transitions come back to the design phase of the entire value chain.

Autumn Fox: They do, and we're really thinking about that entire value chain. And particularly when it comes to retail and logistics. In retail, what do we need to think about? The emissions that are coming from that retailer, perhaps transporting and warehousing the product, that are coming from the footprint of the retail store itself, such as the electricity to power the lights and the refrigerators, maybe gas that's producing heat, etc.

And then even transporting the product all the way to the consumer's house, whether that's happening in a consumer vehicle or, in a, you know, some form of direct to consumer delivery platform. And that was the key insight for us on retail, that we really need to be thinking all the way to the consumer's house.

And that helps us to really look at which systems are most efficient and how to drive decarbonization, even in how we sell the product to the consumer. What's clear is that our first two priorities in this area are working on the, the retailer logistics, and looking at how we move to renewable electricity in retail as quickly as possible.

Keith Anderson: Yeah, it was a brief mention in the roadmap, but one thing that really leapt off the page to me was a comment that digital commerce, on average, and of course, you know, it depends on so many details, but on average, it tends to have a lower footprint than conventional brick and mortar retail. And, so much of my focus is at the intersection of digital commerce and climate work.

I thought it was an interesting point that, you know, a company like Mars is even looking at those kinds of channel strategies in a sense, as influential to outcomes like a Net Zero Roadmap. I think there's more and more opportunity to consider the way these topics can support each other, you know, as you're trying to grow while decoupling that growth from emissions.

Autumn Fox: Yeah, and, and, I mean, interestingly, that comes because when, if you think about driving to the store and picking up a load of groceries, when you come home, your car is not full. There's a lot of air in your car, right? Whereas with DCOM, you can really optimize the capacity of those vehicles, but it goes back to the point on including all emissions, because when we include all emissions, we get the full picture of what's happening, the full picture of how our business strategy affects our footprint, and that leads us to ask these kinds of questions and get these kinds of answers.

So, the process of including everything actually helps us get smarter and be a more competitive business.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Keith Anderson: Well, Autumn, I really appreciate your time and, and insight. You know, I think the work that Mars is doing in this space is really important and is, is going to serve as a benchmark for some of your peers in the industry, we'll include links in the show notes to both the roadmap and some more detail on S-LoCT if people want to learn more.

Autumn Fox: Thanks very much, Keith.

Keith Anderson: Yeah. Thanks again for joining 

Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce. 



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In this episode, join Keith Anderson as he meets and learns from today's guest, Mike Robinson, who is part of the founding team of The 8th Notch, a software platform helping retailers and carriers essentially do what they already do, but more effectively and cost efficiently--incidentally, reducing emissions in profound ways. Together they discuss the outlook on the future of delivery in e-commerce, touching on a report by the WEF, and what The 8th Notch brings to the table in this area. With more than 25 years of leadership experience in the retail industry, Mike shares his thoughts and outlook in this episode of Decarbonizing Commerce.
Learn more about Mike Robinson:

• Link to The 8th Notch’s website
• Link to Mike’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

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Episode resources:

• https://www.weforum.org/publications/the-future-of-the-last-mile-ecosystem/ 

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Learn more about Decarbonizing Commerce at decarbonize.co

TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Welcome to the Decarbonizing Commerce Podcast. I'm Keith Anderson. Logistics is one of the areas, one of the parts of the retail e-commerce and consumer products value chain, where things you do to lower emissions can often have a positive economic impact. That is, if you're able to eliminate waste or operate more efficiently, Not only do you reduce emissions, but you lower cost.

But it's also one of the most complex because the shopper has been conditioned over the last 10 or 15 years to expect first two day, and then next day, and increasingly same day delivery, often free delivery. And so we can already see with studies from folks like the World Economic Forum that, you know, the outlook, given the rising demand for e-commerce and urgent delivery, there's going to be a profound increase in emissions and road congestion driven by e-commerce. 

And that's why I was so interested to meet and learn from today's guest, Mike Robinson, who is part of the founding team of The 8th Notch, a software platform focused on sustainable last mile deliveries. The headline on The 8th Notch is they are a software platform helping retailers and carriers essentially do what they already do, but more effectively and cost efficiently, which incidentally reduces emissions in ways that can be pretty profound. And Mike has more than 25 years of leadership experience in the retail industry. He has expertise in digital retail growth, product management, and technology delivery.

He's held these roles at companies like Macy's and The Gap. As well as IBM and PwC. And these days, he's a strategic advisor to several early stage startups, and an independent board member of Vista Outdoors. So, I'm very excited for you to meet Mike and learn about The 8th Notch, who's working to decarbonize the last mile of e-commerce delivery. 

Mike, welcome to the Decarbonizing Commerce podcast. Good to see you.

Mike Robinson: Good to see you as well, Keith. Happy to be here.

Keith Anderson: You know, I, I often start the show by getting to know the guests a little bit, but in this case, I actually would love to start with, your company's name. Tell us about The 8th Notch and what that means.

Mike Robinson: Yeah. The 8th Notch is not, is not a name that you would think of, but, but it's an homage to the founder's father who was in the railroad industry. And the 8th notch is the most powerful setting on the engine itself, and it identifies efficiency and it identifies power. So it's a little bit of a, you know, homage to his dad, but, but also the notion of, you know, "how do you take advantage of the things that we already have and make them better?"

Which is really what we're attempting to do at The 8th Notch.

Keith Anderson: Super interesting. Well, maybe we can start then with, what you are doing at The 8th Notch and it would be great to better understand your background and how you got involved with the HNOT, with The 8th Notch, once we've given folks a sense of what it does.

Mike Robinson: Yeah, I'll give you, I'll give you the nickel tour of my background, right? So, for the better part of the last 25 years, I've been focused on retail. I, I often describe myself as an accidental retailer because it's not what I intended to be, right? I came out of college with the intent of going to Wall Street and one thing led to another and I ended up in consumer products.

Then I ended up in consulting. And then I stumbled into retail and, and especially it was at the beginning, pretty much at the beginning of the dawn of the e-commerce boom, right? In the, in the, in the late nineties, it was with a, a consulting firm here, here in the Bay Area. And we were really, you know, building the first generation e-commerce sites for a lot of the large companies in America.

After that, I, I recognize that I like the nature of retail. I like the immediacy of it. I like the, you know, the understanding of the customer. I like the psychology of how do you help people, you know, either buy things that they need more effectively, or how do you turn, you know, you know, wants into needs to actually get them to consume, right? 

Which is the great, you know, retailer dilemma in many cases and the calculus that most retailers go through. So, after that consulting agency, I ended up going back to the PricewaterhouseCoopers where I'd been before and I operated in biotech and high tech for a period of time, but always had this longing to get back into retail and had an opportunity to go into it from an industry background.

Joined the GAP in the mid 2000s, helped them rebuild their e-commerce business from a technology standpoint and a process standpoint. Spent some other, spent a few additional years at the GAP, you know, helping a large retailer kind of turn the ship a little bit. And then I got tapped on the shoulder to go to Macy's to do the same thing.

And it was, you know, Macy's was a, $700, so 700 million e-commerce channel by the, when I got there, it was 7 billion by the time I left. Now I'd like to believe that I had a positive effect on it over those, you know, eight years. I've been told I had a positive effect, but I know it was also, it was, we timed the market perfectly and we timed the investment strategy perfectly.

And we, and also timed the consumer as well, who was having a changing behavior set. as they moved away from stores to e-commerce to omni-channel. And, and then I left there, in 2018. It was, you know, that was the completion of my journey. And in 2018, I started, I had this notion of "should I keep going down the large operator role, or should I do what I really love, which is advisory roles?"

And I've done a series of advisories for smaller startups in the retail industry area. From a consumer experience standpoint, cetera, with, with some successful exits associated with it, sit on a public board company for a company that is, you know, primarily consumer products, but transitioning to being much more direct to consumer.

And then my buddy tapped me on the shoulder and said, "I got this idea for a company." And the origin story really goes as simple as this. The founder, Jamie Sapp, who's been a long time friend of mine and a very smart person on the logistics side, looked at me and he said, "how often does a delivery truck come down your street?"

And I said, "every day. In fact, they all come down my street. You know, the Amazons, the UPSs, the FedExes, the OnTracks of the world." He goes, he goes, "does it seem like it's too much?" I said, "sure. Every time that, you know, the fact that I'm getting five deliveries a week and they're coming all on different days feels like a lot" and he goes, "I want to fix that. I want to build a business around that. I want to fix that. I want to unlock value associated with that." 

And that was the beginning of what we wanted to do, which was "how do we, you know, minimize the number of times that a delivery truck comes to your house, but still maximizes the number of deliveries that are intended for you?"

It's just the combination is different and we use time differently. So it's not happening five times a week. It could be happening three times a week or two times a week.

Keith Anderson: Got it. Yeah, I mean, that, that general problem area has become a bigger focus for a lot of the industry that I think is grappling with rising demand among consumers, but acknowledging that the growth of omni-channel and e-commerce is adding to congestion, increasing emissions. There's a World Economic Forum study on last mile logistics that opened my eyes, sort of show something like, if by 2030, we stay on the trajectory we're on, you're going to see a roughly 25 or 30 percent increase in both road congestion and emissions, unless we do something differently. So, it seems clear to me there's a compelling backdrop to work on this area.

Mike Robinson: Yeah, I think there's a compelling backdrop on both sides, right? I mean, I think if you look at it through the consumer lens, I mean, you know, I've seen studies as well that talk about, you know, so, you know, three quarters of consumers would say, "I'd do something differently if it was offered to me," right?

If, if I, if I had the opportunity to have things delivered, and it's specifically around delivery. If you gave me something and made me feel like I was making a conscious, eco-friendly choice, I'm all in, right? And we're seeing Amazon do it, right? I mean, anytime you check out at Amazon right now, you have the opportunity of being able to say, you know, instead of delivering, you know, Monday and Tuesday, deliver it all on Tuesday.

And there's, you know, because it's better for the environment. So, you know, I, I like to say we are attempting to bring to the rest of the retail industry and the carriers that support it what Amazon is doing for themselves. And Amazon is conditioning the customer just like they conditioned them that free and fast was important which they no longer, you know for I I think it's a myth.

It's a mythos at this point What they're trying to do is saying coordinated and sustainable is a better option.

Keith Anderson: Yeah, I, I, that Amazon day option, I, I find one of the sort of canaries in the coal mine in the last mile logistics space, you know. I don't view it as the only thing Amazon is doing, but they are trying to nudge shoppers with both the option and the incentive. I mean, I think if I'm not mistaken, I get Amazon digital credit every time I choose a, Amazon day shipment or a slower shipping speed.

You know, you, you, you mentioned the, the consumer response to surveys, I, I wonder whether those kind of incentives are going to be necessary to really change the behavior because so often I see sort of a gap between what the consumers intend to do or say they're going to do and what they actually seem to do.

Mike Robinson: Yeah well, we asked that question of ourselves too when we started The company and said, you know, where is the best place to inject ourselves? And we took the path of least resistance, which is after the consumer is already involved, right? It's when that, that implicit contract has been set up between the consumer and the, and the retailer in terms of "you bought it and I said, I'm going to get it to you in the next 5 to 7 days," right? We take that window of time and just use it more effectively. Instead of what retailers are doing is they're trying to use the front end of that to do surprise and delight, which I'm not sure anybody is surprised and delighted on it because they're surprised, right, in some cases.

And we're trying to use the back end of that to say, "can I create value out of it by connecting another package and having two items delivered at the same time?" And it could be from, from another retailer. I mean, that's the beauty of this. It's not just, it's not just split shipments of the same retailer.

But it's everything that's coming to every address in America, right? Because we are primarily North America based. We are, we are looking at everything that's in motion and trying to connect this purchase to one of those things just because of the sheer volume of what Americans buy and have delivered to them.

And so using the, using the full time frame, you know, it, it's already been committed by, by the retailer. Right? And the surprise and delight piece, look, for your most loyal customers, absolutely find a way to do that. But, but for the ones that aren't loyal to you, or don't purchase from you frequently, then, then there's a real opportunity to create, to unlock value and unlock the carbon savings as we've talked about.

Keith Anderson: Well, I, I wonder if it also varies by item. I think, as you mentioned, Amazon helped condition consumers to expect everything. You know, in two days, then the next day, if not same day, a huge percentage of what you might choose to order online is not for immediate consumption or usage. You really don't, if you take a moment to pause and reflect, need it with much urgency.

And so, I can also imagine this being effective if you maybe prompt shoppers to think about, you know, when do you really need this?

Mike Robinson: Yeah. And, and that's why we started post checkout. Our goal is to go in to checkout, right? And actually give that opportunity and, and we've got, one or two retailers that are contemplating it as, as an alternative to how they, how they position free shipping, right? "Right. I'll give it to you free, but you got to give me more time to look for opportunity, right?

To be more eco friendly. If you need it faster, I'm going to charge you a surcharge. I'm not going to charge you the full amount, but I'm going to charge you a surcharge." And so they're contemplating some A/B experiments around that with that, which I think is really smart. You know, because my, my thesis is Amazon's making it very, very clear to people that you should start thinking about this. There's no reason why the rest of the retailers can't start thinking this way as well. If they got conditioned to go free and fast, they can go, that they can be conditioned, if their customers are being conditioned to think about coordinated and synchronized.

Keith Anderson: So maybe it's worth taking a step back and just unpacking for listeners in a little more detail how you do what you do. So we, we know now you're inserted after the checkout, you sit between the carriers and the retailer.

Mike Robinson: I, I 

we sit in between and from the carrier, we have a view into their network of everything that's in motion over the next eight days, right, going to every address in America. For, from the retailer, I now have the orders that are being created in that day and now I can analyze them to understand I can find a match, or I can't find it.

If I can't find a match, I do no harm and I just will let, let the order go and it, and it's processed the way that the retailer would. If I can find a match where something is going to, you know, connect with another package to be delivered on the same day as another package that's already in motion, and it still lives within that commitment that the retailer has made to that customer, then I schedule when that order should be pick, packed, and shipped. And that's the change. What usually happens right now is retailers get orders and figure out how to process them as quickly as possible because speed is king. And what we're saying is there is a percentage, 15 to 20 percent of your orders, that have an opportunity that if you waited a day, maybe at max two days on a couple of those, you can connect it with a package that's already in motion and unlock dollar savings and we'll talk about the carbon savings as well.

But, but we're talking about scheduling when orders start their journey instead of what is really a FIFO or first in, first out model that most retailers follow right now.

 

Keith Anderson: Well, maybe we start with the dollar savings and just talk about the, the operational considerations here. So, I would imagine if we're starting a little bit later and consolidating orders at scale, does this mean fewer trucks on the road or how does this sort of cascade into dollar savings?

Mike Robinson: Yeah, yeah, you've, you've really hit the nail on the head and it's, and it's, and it's, lowest unit of measure is a delivery stop, right? If the truck used, used to come to my house five times a week and now it comes three times, it doesn't have to stop here twice, right? And each time and, and the carrier that we have the strategic relationship with, they've done the analysis that says that every time that that truck doesn't need to stop, the driver get out, drop something off, get back in, move to the next stop, there's a, there's a multi dollar savings associated with it.

And, and what we what we, convinced the, the carrier to do was if you can, you know, and if that's important to you, and they said, "absolutely, delivery density is absolutely crucially important to us for us to be able to manage our network more effectively over time. If you can do that, we will share those savings with the retailer. And we'll share them with you because you've changed the behavior." 

So the retailer ships on the date that we tell them to. We told them the date that they needed to ship on. And as long as those two things happen, both of us benefit. The carrier benefits because they, they don't have that stuff. Now, you fast forwarded, right?

Doing that at scale, right? Ultimately takes trucks off the road. And back to your original comment around, you know, the impact by 2030 is that it's about route compression, right? It's maybe my driver doesn't drive down my street five days a week. He drives down three days a week, right? Because his route has become so, so synchronized that it's Monday and Wednesday he comes down my street.

Or he only drives on Monday and Wednesday, right? And they, and they change their entire approach to it, which is right now, they're just keeping up. We're talking about giving capacity back in a more intelligent way.

Keith Anderson: You said earlier that somewhere between 15 and 20 percent of your orders on average might fit this profile. Are you seeing patterns in what types of orders or what types of items meet those conditions? Or is it purely about where the item is and where it's headed?

Mike Robinson: Yeah, I think the pattern that we're seeing more is around at, is around the address level. There are clearly, you know, households in America that consume more than others, right? It, it, it's just the nature of the beast. I, I, I would put my, I mean, I, based on the addresses that we've seen, I know I'm pretty high on that list myself, right?

You know, as, as I, as I, you know, adopted that obviously as an e-commerce, individual, but also someone that went through the pandemic when there was the permanent step function up, right? I think the piece that we haven't unlocked and the one that we're trying to is subscription models. Right.

Right. When it's, when it's drugs or coffee or dog food or something of that nature, where there's a clearly defined set date that they, that they know, but it, but it has the wiggle room. What can we do around that? Right. And in terms of being able to find things, but I'm going to go on, you know, I'm going to do the Pareto analysis and say that there's probably 20 percent of the addresses that get 80 percent of the deliveries.

I don't think we're, I don't think we're as refined on that right now as we'd like to be. But it's clearly trending in that direction. And to your point, but it's category agnostic, right? I mean, I don't, I don't personally care. I mean, it's got, it has to be, you know, it has to fall into a specific service level for the carrier to do it.

And so, you know, it's part of their ground delivery service. And so there's package types, right? There are other package types that fall out of that. But actually, one of those options is we're thinking about, bringing some of those package types back into it because the truck is already headed there instead of handing it off to the postal service for that final mile, which many of the carriers have done.

It's, you can keep that in your network and actually have it ride along for free at that point.

Keith Anderson: Two things you said, have sort of prompted some follow up questions. One, on the subscription side, one of the things that I really I think it's notable about subscribe and save type models, you know, the reason that you're able to pass the savings on to the consumer is with the advanced notice of when the item needs to get to the doorstep, you can basically always use ground transport.

So your cost of logistics is lower, and you can pass some fraction of your lower cost on to the consumer. And it had me thinking a little bit about the extra day or two you referenced as you're working to consolidate these orders, does that in any case ever lead to a mode shift here also? You know, that is an item that would have been delivered, from the point of origin to at least the last mile by air transit.

Does it in any case end up on a train or a truck instead?

Mike Robinson: Yeah, I don't think we've run into that yet, right? Right. I think the, I think the, I think it's more the other way of it's a small enough package that it's hand, you know, the final, the final mile is handed off to the Postal Service to deliver. Just because of size and weight, right? And because, you know, I don't, you know, I can add that day associated with it.

Now it becomes something that becomes more predictable and also the traceability of that. And the, because once it leaves the carrier network and it goes into the Postal Service it's kind of lost in there for a bit and you, you know, it's very, very hard to track. That would be the mode change, I would think, rather than the other option.

But, you know, I also look at it and think that we're still at the beginning of the, of the journey on this, right? And, and it's because I, I think the final mile is the one, it's the one node where, you know, trying to optimize and synchronize hasn't gone all the way to the address level. And I think that's the piece that we are looking to change more than anything else.

You optimize the truck, right, you stack it out based on the route, but you don't base it on the address. And so we're bringing that unit of measure down one level lower.

Keith Anderson: So I know you're, you're early in the journey. You're working with a, a major carrier and I imagine you've got retailers engaged also. Are you seeing patterns in terms of the types of retailers that are engaging?

Mike Robinson: Yeah, I mean, the beauty of being with a strategic carrier that carries, you know, roughly half of the package delivery in the US, you know, gives us weight, right? It's positioned through their accounts with, you know, top 40 retailers in the US. We're seeing traction with them because they're looking at it through that dual lens.

I need operational savings, right, because this becomes pennies of EPS if done right. And I need carbon savings as I think about it, because I haven't really thought about the delivery component as a place where I can drive sustainability and answer ESG questions. I think the other is, they're all public companies.

Right? And so they all have ESG commitments, and they all have boards to answer to, and they all have programs that they need to bring forward, whether it's for the 2030 or 2040 or 2050 you know, timing, whether it's the type 2 or type 3 emission, you know, issues. There's a lot of complexity out there. This is a simple thing.

That is a simple change that says if you allow us to schedule, and which means use time more effectively still inside your customer promise window, and we can unlock value, and that stop that I mentioned, that delivery stop, that 800 grams of carbon, right? You start to multiply that, right? That becomes, you know, hundreds of thousands, if not millions of metric tons of carbon that just are never created.

That's why I call it carbon avoidance instead of carbon reduction. It's just the carbon creation event never happened, which is that delivery stuff.

Keith Anderson: Yeah, I, I think one of the pieces of sort of conventional wisdom that I encounter all the time in sustainability is, "boy, it, it just doesn't pay back. It's... Almost everything we want to do is going to be cost prohibitive." I think logistics is one of the areas where the fruit hangs pretty low because so many of the things you can do to avoid or reduce carbon tend to move in close connection to lower costs.

Mike Robinson: Well, and that was really the, you know, we have, we have some really smart investors, but the one VC, 

the first VC that we accepted money from, is one that is focused on, you know, climate tech, right, or sustainable practices. And the thing that the principle said that, that really struck with me is like, "you deserve to be in business because you're creating efficiency out of inefficiency. You're not asking anyone to do anything dramatically different. Just do it better." 

Which is what we really need in many cases. All the answers are in front of us, right? From a sustainability standpoint, especially on the logistics side. It's just how do you take advantage of the information that's available to you, assemble it differently, and make better choices?

That, to me, I think is the difference of what we are offering versus, but I think every retailer has to figure out whether it's, you know, a change in the, a change in the energy they use, a change in the materials they use, a change in the manufacturing process, et cetera. This is something they're doing already, just make this very simple change of use time more strategically.

 

Keith Anderson: So, in that sense, what do you think is going to accelerate adoption across the industry? And I guess the flip side of that is, what's holding it back?

Mike Robinson: Yeah. I, I would love to believe it's a foregone conclusion. I know it's not, right? Right. These are, these are tough choices. And, you know, after spending 25 years in retail, I know it's very much a, you know, "show me" type of industry, but it's also a, "I don't want to fall behind my competitors" type of industry as well.

Right. And, and the, and the margin of difference is usually pretty small. I think adoption solves all problems. And, and the, and the adoption curve that we're on right now is a pretty good one. It needs to be better. It needs to be better. And that's Mike Robinson not only talking as a business person, but Mike Robinson talking as a, as a citizen of the world.

It needs to be better because I think we need to impact what that metric, what the study showed about 2030. I think that we have a real chance of being able to impact that. I don't, I don't believe it's going to be regulatory at this point. I think there's going to need to be choice, but I think what need, what, what, what retailers are starting to see is "my customers are asking for this," you know, every, you know, that they're, that they're, they're starting to, you know, they're, they're clearly voicing their opinion in these surveys. "At some point, they're going to choose with their wallet. And if I'm not there, right, if I'm not showing action, if I'm not taking advantage of everything that I do from the moment I conceive a product to the moment I deliver a product, then I'm probably going to lose in that," right?

For those that are conscious and, and the consciousness level is raising. Now, my generation, you know, I'm 58 years old. We're probably not going to change a significant amount, but the generations, you know, younger than us are already, already doing this, right? I mean, this is the, I think that is what is driving these metrics of that's that three quarters of consumers want to see something and 50 percent of companies are saying, "I want to do it, but I don't know how."

And so what we're offering is a simple path in. Adoption will help, but I think it's just, you know, consumer consciousness and the, and, and the, and the eco-conscious consumer will force this to happen in some way, shape, or form.

Keith Anderson: Yeah, a couple of quick thoughts. I mean, I, I know in most, retailing consumer product businesses, we think of the consumer as king. The one thing in my roughly 20 years of experience I've noticed motivates a lot of retailers even more than the consumer is one of their major competitors. And so I think it's helpful in the sense that Amazon is setting an example and raising the bar and, you know, they're iterating.

I can see them iterating, you know, over time, but if, if any of what they're doing to nudge behavior sticks, I can see that being a motivator for competition.

Mike Robinson: Yeah. I think it's going to be more and that's competition with both the carrier and the retailer, right? If you think about Amazon, they're both, right? I mean, you know, that they're, that they've effectively developed their own. And, and those, and those services on the fulfillment side, they're offering to other retailers. And so at some point it becomes something where they offer it through an eco lens as well.

Right. And so I think, you know, I think the voice of the consumer, I think the number one competitor for, for both and the behavioral changes that they're showing and just how loudly they shouted, right? And, and they haven't shouted it yet. I mean, what was it just seven or eight months ago that all of Amazon's advertising was around their commitment to 2030, right, and what they're doing, but it was more vehicle-driven, right? It was more facility-driven, right? It wasn't necessarily this conversation, but I sense it coming. And as soon as they start shouting it, Everybody's going to perk up and say, "well, I better be there too. How do I get there?" That's where we come in.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Well, Mike, if people want to learn more about The 8th Notch or get in touch with you, where would you direct them?

Mike Robinson: Sure I would. Yeah, our website is out there. It's, it's not the most information. It's intended to be an informational website. It's www.t8notch.com. We're on LinkedIn as well under The 8th Notch. You can contact me directly at, M Robinson, R-O-B-I-N-S-O-N, at t8notch.com but, but we're open for business.

We're looking to onboard retailers. And, you know, if you are a customer of the carrier that I have not mentioned, we will help to make, you know, help, help to get the introduction moving forward. Or if you're not a wannabe, we'll definitely make the introduction for you. But, you know, this is a call to action as clearly as I can make it as, and we started in the preamble, Keith, about a one man megaphone.

I want others shouting this as well. And that's, and that's the push that I'm on.

Keith Anderson: Well, Mike, thanks so much for joining us.

Mike Robinson: Absolutely my pleasure. Thank you, Keith. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=r8k0lqpn

Keith’s guest this week is Julia Marsh, the co-founder and CEO of Sway, a biomaterials company replacing plastics with regenerative materials made from seaweed. As a designer, Julia spent over a decade building brand and packaging systems for consumer goods companies, tech startups, and design studios, winning the Closed Loop Partners Beyond the Bag Challenge in 2021, and a finalist for the Tom Ford Plastic Innovation Prize in 2022. Join this conversation as Sway announces a $5 million in fresh funding, and Julia brings an incredible perspective on the role of design in packaging and solving problems in sustainability, why seaweed is such a high potential alternative to petroleum-based plastics, the state of and outlook for composting infrastructure, where Sway's packaging works best, and what's next for Sway.
Learn more about Julia Marsh:

• Link to Sway’s website
• Link to Julia’s LinkedIn

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TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Hi, and welcome to the Decarbonizing Commerce podcast. I'm your host, Keith Anderson. Our guest this week is Julia Marsh, the co-founder and CEO of Sway, a biomaterials company replacing plastics with regenerative materials made from seaweed. As a designer, Julia spent over a decade building brand and packaging systems for consumer goods companies, tech startups, and design studios.

In 2021, Sway won the Closed Loop Partners Beyond the Bag Challenge. In 2022, they were a finalist in the Tom Ford Plastic Innovation Prize. And just a few weeks ago in 2024, Sway announced $5 million in fresh funding. And Julia brings really incredible perspective on the role of design in packaging and solving problems in sustainability.

Why seaweed is such a high potential alternative to petroleum-based plastics, the state of and outlook for composting infrastructure, where Sway's packaging works best, and what's next for Sway. So I'm really excited to welcome Julia Marsh, co-founder and CEO of Sway, to the show. 

Hi, Julia. Welcome to Decarbonizing Commerce and congratulations on the funds you just raised.

Julia Marsh: Thanks, Keith. It was a huge effort and we're really happy to celebrate.

Keith Anderson: Well, you're the second of our guests so far to join us within a day or two of raising a round. So, and, and in both cases, I didn't realize it when I invited them. So, hopefully it's a pattern that continues.

Julia Marsh: You've got the Midas touch. Yeah.

Keith Anderson: That's what, that's what I'd like potential guests to believe anyway. Well, maybe a good place to start is, why don't we tell the audience what is Sway and how did it come to be?

Julia Marsh: So Sway is a materials company. We are replacing plastics with seaweed. And it came to be through my love of materials of the circular economy of design. I'm a designer by trade. I spent about a decade building branded packaging systems. So working with CPGs and design studios and tech companies to make their visions a reality.

And I'm at... I was oftentimes sourcing materials or involved in implementing or making those materials beautiful. And it was just sitting at total odds with my background as also an environmentalist and someone who grew up in California. So, we started the company just a few years ago and we've made a lot of progress since then.

Keith Anderson: So, it sounds like plastics were sort of, a driving factor behind it. Why are plastics such a problem? They're so pervasive and they've got, you know, some, some benefits that I think are tough for certain industries to quit.

Julia Marsh: Everyone, I feel like, yeah, everyone knows a bit about the plastic problem. It's kind of one of those, "please don't tell me any more about the plastic problem" situations. So I'll, I'll just be brief here. There is no industry that is immune from plastic or the generation of plastic pollution. It's something everyone's confronted with in some capacity, and unfortunately, demand for packaging is only increasing.

It's made from petroleum, and more than likely, it's going to go into nature or into landfill or it's going to be incinerated. And what we have to do when we're thinking about plastic is think "why do we continue to use it?" Well, it's very good at its job. That's why it's been so hard to replace. And then, like, "where is it actually necessary?"

I would say that about 50 to 60 percent of plastic is completely unnecessary and can just be cut out of the equation entirely. When you look at thin film plastic, which is what Sway is focused on, these are necessary plastics. They're usually for hygiene or to prevent products from being damaged in shipping.

They're also the most difficult to recycle and they're the most difficult to replace. So, I think looking at necessary plastics that are doing a real function, that's where we need to focus our time and innovation. And that's also the, yeah, the hardest problem to solve.

Keith Anderson: Yeah. Yeah, I, I mean, it's, it's been such an interesting space for me as an observer because you're exactly right. I think everybody on some level acknowledges the problem. And there have been different approaches, recycling, composting, a lot of the industry, it seems to me, is continuing to place bets on recycling.

And again, talking about infrastructure that they'll invest in and develop, but, you know, even some of the most forward looking companies and their coalitions have been lagging the targets they set for themselves. And so, then I think in parallel, when you look at compostability, it, it's got its own challenges.

You know, you're much closer to this than I am, obviously. How would you characterize the state of play now and where do you see things headed?

Julia Marsh: Huge momentum towards recycling. Of course, it's easier, it's more straightforward, and there's a lot of incentive for plastics manufacturers to continue working with the material they already know. Big oil is also betting on plastic to save itself, so there's some definite agendas playing out. BP projected that over the next 20 years, 95 percent of net growth and demand for oil would come from plastics.

So... 

Keith Anderson: How much of that is packaging? Do you know?

Julia Marsh: Packaging makes up, I think, about 40 percent of all plastic produced, something like that. Yeah.

Keith Anderson: So non-trivial part of that growth story.

Julia Marsh: Non-trivial for sure. Yeah. And again, the sheer volume of plastic and again, like specifically focused on flexible packaging is just, it's unfathomable for the brain to calculate. Five trillion bags, wrappers, pouches, plastic bags are produced every year. That's 160, 000 bags every second. Another second. Another second. So just the sheer volume is huge. You can't recycle your way out of that problem. It's going to take multiple types of solutions. So while recycling may be good for certain applications, we also need to just remove packaging entirely in certain places.

And then there's a role for compostable packaging to play as well. We would argue it makes sense where the material's coming into contact with food and it's being contaminated, it's not going to be recycled anyway. It might even help alleviate food waste by encouraging people to compost. Or in use cases where there is access to compost infrastructure.

Or where there's a high likelihood that behind the scenes, the brand can actually collect that packaging and compost it. So I think it's a, it's very like use-case-specific matchmaking.

Keith Anderson: Do you see infrastructure investment or scalability of that end-of-life component happening in composting? I mean, I see different approaches. There's new national household startups launching. There's municipal composting. Where I live in Boston, there's three or four services that service my neighborhood, but they're all private and opt-in.

And then there's a small minority of folks in the area that have their own backyard compost. You know, what's your projection of what the landscape will look like over the next three or five years or so?

Julia Marsh: In the United States, I do believe composting is an inevitability. In the same way that we need to realize recycling only properly began in the 70s, we can absolutely adopt commonplace composting behavior. It makes a ton of sense, not just from the packaging perspective, but again, from the food-waste perspective. It makes no sense that any biological material should be going to landfill.

It should all be literally biologically recycled. So I think that's an inevitability. There's lots of reasons why that will continue to scale and there are a number of investments going into expanding domestic infrastructure. We also know that these systems can work because they're successful with it in Europe.

Italy is extremely great at composting. It's just a normal part of everyday life, or you see expanded programs in New York, or like you mentioned, for people living in cities, things like below me, or the mill bin, where there is just this routine of, yeah, not throwing organic waste into the trash.

So, I think all those different avenues give me hope, but, yeah, most people today, they don't compost.

Keith Anderson: Well, I suppose since we're talking about that end-of-life stage, you know, what happens with Sway packaging if someone is unable to compost it?

Julia Marsh: So, we've designed to give the consumer optionality. The best use case is, you compost it in your home bin. Mix it in with your backyard compost. We adhere to the TUV Austria Home Compost Certification, which means less than 180 days, it'll decompose naturally. If you have access to industrial compost, it'll degrade even quicker, less than 48 days.

And then if you don't have those options, We put it in the trash bin, but it'll decompose similar to a fruit peel. So while that may not be better or ideal, it's, it's a reality. And for now we can say this is better than the alternative, which is that material kind of living in existence for all eternity.

In one form or another.

Keith Anderson: Yep. Can we talk a little bit about if we were to compare and contrast some of these bioplastics to the conventional materials, you know, on technical factors, how do they compare and where are strengths or weaknesses? What do the economics look like? You know, I think in many cases, the environmental considerations are what draws people to the topic of packaging and then as the seats at the table get filled by people in branding or supply chain or operations, all these other questions pop up.

Julia Marsh: that's true. I've been in the position again of selecting materials. So I understand the trade offs and the considerations that designers and packaging and sustainability teams are making. The most common alternatives to plastic come from corn, potato, sugarcane, wood. And a lot of these alternatives fall short in one way or another.

Maybe on performance, maybe on timeline for decomposition, or maybe they're not really that plant based, like a lot of alternatives are maybe 10 percent plants and then the rest is not bio based. And then most of them are way more expensive than traditional plastic. So, depending on what your priorities are, it makes one of those solutions better than another.

A lot of brands are turning towards paper, that's the overwhelming strategy, is "we'll just turn to paper while we wait for a better solution to come." But in some cases, you really do need the properties of plastic. You need transparency, heat sealability, stretch, moisture resistance, oxygen barrier.

These qualities that makes plastic so great in the first place. And so what we look at doing is understanding the customer need. Has plastic been over engineered to solve the problem they're focused on? For example, packaging for toilet paper? Like, if you go to Costco and you buy a big bag of toilet paper, that's seven layers of film.

It looks like one, but it's seven layers of film. It could last forever. It's so completely mismatched with what the actual use case is. So, like, really teasing out what performance is actually necessary, and then how do you prioritize impact? Are you thinking about end-of-life? Are you thinking about sourcing?

Are you thinking about livelihoods, like the S in ESG? And we try to understand that piece and then we can make recommendations on which of our products are going to check those boxes. But, to answer the question, these materials come at a premium. We're a startup, we're growing, so of course they come at a premium.

But in the long term, we really see a path where we can be competitive with all these alternatives. And eventually, as we hit commercial scale, competitive with a lot of different types of plastic.

Keith Anderson: Maybe it would be worth going into a little more detail on why seaweed? You know, I think that there's been a little momentum building with seaweed and sort of ocean based materials. And I think you're, you're one of the leaders building momentum in that space. Why is that a superior option versus some of the prevailing bioplastics?

And I'd love to learn more about how it plays into the idea of regeneration. 

Julia Marsh: Yeah, so there are so many interesting alternative feedstocks. Seaweed is the most compelling for basically every reason. So where the alternatives fall short, seaweed exceeds. For those who don't know, there are 12, 000 species of seaweed, maybe more that we haven't discovered in the depths of the ocean.

They come in reds, browns, greens, and they contain natural polymers, which you're possibly already using in your daily life. Seaweed is in your toothpaste. It's in some of your facial creams. It's in your donut glaze. It's a sneaky ingredient that these natural polymers are around, and that's the same component of seaweed that we use in our packaging materials.

It wants to gel. It wants to stretch. But the seaweed sourcing story is what is creating so much momentum around seaweed as a, as a, feedstock. 

You don't need fresh water. You don't need land. You don't need pesticides. You don't need much time. It grows 20 to 30 times faster than corn or sugarcane.

And we live on a blue planet. The majority of Earth is ocean. So there's seemingly infinite space for us to cultivate this material to not subtract from, you know, food crops. And then to also require very few carbon-intensive inputs. That makes it very compelling. There's the coastal livelihood component.

So people living on coastlines who are affected by overfishing, they can turn to seaweed as a reliable source of income. There's this burgeoning blue economy that really people are very excited about. All of those benefits contribute to this idea of regeneration, that a feedstock actually gives more than it takes.

And then that's not even all of it. So while you're cultivating seaweed, you're actually filtering excess nutrients, you're mitigating ocean acidification, which is one of the negative effects of climate change. You're actually potentially improving biodiversity by creating habitat for biodiverse life.

They're all, yeah, there's just like so much goodness baked into seaweed and that's just at the source. And then you get to process it, turn it into something that biodegrades naturally, that actually adds nutrient content after it's used. And some companies, like mine, are able to engineer these materials to perform really well, so the consumer has a great experience.

It's just kind of checking every box, like no matter which way you spin it, seaweed is really going to be the future for a lot of materials.

Keith Anderson: It's so interesting. The bioplastics world, I think, has immense potential, and just starting to understand some of the different approaches and considerations across that spectrum of, you know, consumer to sourcing is really interesting. Let's talk a little bit more about some of the applications that are already out in the wild and where you're starting to see traction.

Who's interested, what's working, maybe just to, to start, step through some of the types of packaging that are in your portfolio at this moment and the kinds of products or use cases that they support.

Julia Marsh: Sure, so we have three buckets of products today. We have our first wave films, which are being used primarily as windows in retail boxes. We have an ingredient, which is a thermoplastic seaweed resin. We call it TPC, that can be used by plastic manufacturers in all kinds of use cases. And then we have a thermoplastic film, which we call TPC Flex.

And this is a flexible film that can be used for all different types of use cases, bags, wrappers, pouches. We're starting with a focus on fashion.

Keith Anderson: in fashion, is it, I assume it's primarily bags.

Julia Marsh: Poly bags. Yeah, so we Really wanted to focus on ubiquitous materials that, for whatever reason, cannot be eliminated from supply chains. And polybags are a really, pronounced issue in the fashion industry. There are 180 billion of them used every single year in the fashion space alone. It's a huge issue.

Last year we won first place in the Tom Ford Plastic Innovation Prize. This was a global competition to find solutions for this really, really ubiquitous type of packaging that keeps products safe while they're being shipped that, you know, is necessary, but unfortunately is almost exclusively plastic.

That was a, that was a big focus for us. And so far we've seen great traction with brands like J. Crew and Burton and smaller brands as well. And, we actually just launched, more access to these materials via our website. 

Keith Anderson: And you also just launched a, a seaweed window. Can you tell us a bit about the use cases and why you made that?

Julia Marsh: Yes, I'm so excited about this. So our team wanted to find a way to really address sneaky plastics, the ones that maybe you don't think about, but that are all around us. I encourage you as you're going down the grocery store aisle next time to just observe how many product windows there are. It's this piece of plastic that there really is no desirable end-of-life for.

It's not going to get recycled. It's just going to landfill and they're everywhere. So we partnered up with EcoEnclose, who's a leading sustainable packaging, provider here in the States and designed retail boxes with seaweed windows. So they come with a 100 percent recycled fiber box. The window is 100 percent biobased, primarily seaweed, and we have two stock offerings that we launched so that anybody can get access to these materials.

I think a lot of folks in the world don't feel like they can access innovative materials, so we thought it would be special to just let them be available at the click of a button. And then we also do custom collaborations. So the most recent activation we did with seaweed windows is with a sustainable swimwear brand called Le Club.

And we designed this custom box for them. I love the box form factor because it gives you so many dimensions for messaging, for storytelling. We did a custom circular window and really played out this overlap between the oceans being a source of the solutions and people who love to swim and purchasing the product should be investing in those solutions.

So yeah, it really just was such, such fun and really just the beginning in terms of how we're creating customized solutions for brands. 

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

And you mentioned, the website, you know, if, if folks want to learn more about the product or the material or get in touch with you, where would you send them?

Julia Marsh: Yeah, if what I've described is interesting, if you like the oceans, if you're interested in composting or just using new renewable materials, you can visit swaythefuture.com. We have inquiry forums. If you're a company that makes biobased or biodegradable or compostable products. We have an ingredient called TPC that you can blend into those products.

So, we're really looking for folks to come play with us, to explore, to experiment. We also have those packaging solutions I described. So, swaythefuture.com, come say hi. 

Keith Anderson: Well, Julia, this has been really incredible. I appreciate you joining the show. 

Julia Marsh: Thanks. Love chatting with you. This was the most natural flow. I really enjoy it.

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=18230w3n

Join Keith Anderson and Santiago Navarro, founder and CEO of Packamama, a company reimagining wine packaging to lower emissions while winning at the shelf and preserving tradition. This episode is an interesting case study covering the importance of packaging from a transit perspective, the unavoidable risk of breakage, and the consumption experience of wine. Learn how Packamama has approached creating a package for the future with those and other considerations in mind.
Learn more about Santiago Navarro:

• Link to Packamama’s website 
• Link to Santiago's LinkedIn 

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TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Hello, welcome to the Decarbonizing Commerce podcast. I'm your host, Keith Anderson. Many conversations about sustainability and climate in retail and consumer products disproportionately focus on the role of packaging, and understandably so, it's among the most visible and tangible elements of a product's environmental footprint.

But life cycle analyses often reveal that in many categories, packaging is a meaningful but not a primary source of emissions. But today's conversation is about the wine category, where the glass bottle actually is the single largest source of emissions. That is, the energy required to produce, move, and recycle wine bottles accounts for almost a third of the typical wine's climate footprint.

And so I was really intrigued and interested when I discovered a company called Packamama, which is reimagining wine packaging in the context of the need to prioritize lowering emissions, as well as a retail landscape where digital commerce is a growing part of the equation. And, you know, wine is, is I think a really interesting case study because the packaging is important from a transit perspective, because there's always the risk of breakage, whether you're at the digital or the physical shelf, it's a really key part of how shoppers discover and choose which wine to drink.

And naturally, the consumption experience has, a lot to do with the packaging also. So I think it's a really interesting case study to look at and learn how today's guest has approached, creating a package for the future with those and other considerations in mind. And I think wine is also a really interesting category because it's among those that is already facing significant impacts from rising temperatures and extreme weather.

So I'm really excited for you to listen to today's guest, Santiago Navarro, founder and CEO of Packamama.

Santiago, we're recording on a Friday morning, where I am, I guess, closer to the end of the work week where you are, so, happy Friday. Do you already know what wine you'll be enjoying this evening?

Santiago Navarro: Not too sure yet. It's been a busy week, but yes, likewise, happy Friday to you. I am speaking to you from central London. So I'm sitting across from Big Ben, actually. So very central London for those who know the City of London. I'm Santiago Navarro, CEO and founder of Packamama. Packamama stands for Packaging Protecting Mother Earth, or Pachamama to some indigenous peoples.

And what does Packamama do? We offer sustainable wine bottle packaging to the wine industry. Why sustainable? Because Shape Innovation allows us to pack these bottles like books or to cross pack them. So very spatially efficient. We get about double the product in the supply chain. Very lightweight because they're made from recycled PET.

That's the plastic we use for drinks bottles. And finally, recyclable in most recycling systems across the world. So, we, we offer this packaging to the wine industry, and I can immediately explain why, or if you have questions, Keith, please let me know, but, I think the context to why we do sustainable packaging in wine and why wine needs to decarbonize is a fundamental place where to start this conversation.

Keith Anderson: Let's start with that, you know, why, why did you end up focused on wine and, and why was packaging where you focused within that industry?

Santiago Navarro: Yes, so I first came into wine as a wine retailer, and that's, gosh, nearly 15 years ago now. And I was offering wine as most people do and the packaging in which it's come. But actually when you take a moment to think to why does wine come in the packaging it does, you start to realize that actually, wine companies in 21st century are using 19th century packaging, which is an incremental innovation over 17th century packaging. So the round glass bottle as a wine bottle is a British invention in the 17th century by a gentleman called Sir Kenelm Digby, who came up with the glassblowing process to make wine bottles strong and at scale.

So pre that point, wine was moved around in other containers. But Digby came up with the bottle that's known as the Onion Bottle, and that has informed the wine packaging for the last 400 years. 200 years ago, the French Adapted Digby's Onion bottle to the bottle of shapes we know today. And if you pick up a wine bottle in California or New York or Florida or in Con in Europe, the UK, et cetera, these, these are the bottles that actually

spread with the noble grape varieties, which are the principal grape varieties that have spread across the world, the world of wine. And with them came these two shapes. Actually, this bottle is informed on the Bordeaux, claret in some cases called. Then there's the Burgundy bottle with the more slopey shoulders.

And so, it was whilst trying to build an online business in wine where I came to realize what a challenge using 19th century packaging is, because I know we might be here to talk about decarbonizing, but let's start with talking about being successful. Wine is the ideal product for online sales because it's got a long tail, like books or, or music.

And so, the possibility to sell wine online makes sense from a logical perspective, but actually wine has not been very successful online compared to the big retailers as much as it should be. And so, that's in my view partly down to the problem with packaging. If you try to send out wine in round glass bottles successfully, D2C using couriers or third party delivery companies, it's a real challenge.

It costs a lot of money. It requires a lot of packaging. If it breaks, it's a health and safety issue because of, because of shard glass. And so, you know, wine needs a packaging refresh, and so it took me working in the wine industry to start to realize, that wine probably needed a bottle upgrade, and so that's what I decided to do is to launch that bottle upgrade, looking at all the aspects that are relevant for successful... I mean commerce, you know, space and weight or volumetric weight, as it's called, if you look at a, UPS or DHL or FedEx or whatever. And

Keith Anderson: Sure.

Santiago Navarro: how do we make best use of the space available in a carton, in a truck, in a, in a, in a, container and how do we light weight? And so then that extrapolates actually into

cash savings can convert also into carbon savings. And, just a final point on that. We can elaborate more in a second, should you wish. The, wine industry has, a hotspot, or there is a focal point, which is the majority of wine's emissions. And that is its current round glass bottle packaging. Its manufacturing, movement, and recycling.

So, yes, whilst glass might be considered the status quo, it is contributing the majority of wine's emissions, US studies, European studies, Australian studies, all show the same thing. And so if wine wants to get serious about decarbonizing in a climate crisis, it's got to change its bottle.

Keith Anderson: If we can spend just a minute or two, I think it's really interesting that part of what led you to this business was the, the, sort of, what, what made wine a good fit for e-commerce, but some of what was holding it back, and I think it's just worth unpacking for a minute some of the trade offs between the, let's call it the prevailing packaging and, and what we're talking about here. Obviously, lightweighting and reducing cube, or volumetric weight saves space. You know, you'll have both material cost savings and, and other logistic savings. You'll also, I would imagine, due to using plastic instead of glass, have potentially less shrink in the sense that you're going to have less or no breakage, so all that I think makes a lot of sense as it relates to e-commerce.

Are there, are there scenarios where that packaging makes equal sense for a brick and mortar environment, or were you thinking of this as way that wine could, mature in, in e-commerce the way that other categories have by rethinking product design and formulation, packaging and other factors to be more compatible with that model of retailing?

Santiago Navarro: Yeah, great question, because initially I thought our greatest successes and advancements would be in e-com or D2C, but then I realized actually till consumers understood what they were potentially buying, it was better to be in bricks and mortar, so people could actually grab the pack, identify it, and then reorder it online, so, my preference nowadays, we're available in nine countries, we're launching in the US in the middle of this year, across the US actually with a big retailer, so, by, by middle of the year, we'll, we'll be widely available. Yeah, I've come to realize that we're probably better starting in bricks and mortar and then evolving into D2C, but there are instances where there has been an entire D2C deployment and it has been successful.

One such example is, end of last year in Australia, Australia's largest organic wine producer, Tamburlaine Wines, produced just sort of 30, 000 units and put them up on their popular website and shared some of it at Cellar Door, but certainly through their website. And we were sold out before the festive season started.

So, really a very good pickup for tens of thousands of units very quickly and sold out really well and, and delivered really well, which is important because, as you correctly pointed out, costs of delivery when you have breakages, when you have expensive packaging, because it's heavy and very volumetrically large to make up all the padding and other things required for fragile glass.

 That doesn't, it's not helpful for wineries and I know that in the US, D2C is very important for wineries and actually wineries in the US are really good at bringing people to cellar door and signing them up to newsletters and then selling direct. So there is, you know, there is a need to have better packaging there, but in answer to your question, my preference for the time being, as we're still new kids on the block, is that people can see us in bricks and mortar retail and, and can, you know, engage with what we do.

We regularly see on social media, people having discovered our product in some retail store somewhere and needing to share it with their community or their followers and these are just consumers so not somebody in a sort of professional environment but more in a social environment say hey look what I found and look at this how interesting it is it's it's flat back etc and that's I think important also with packaging that works in summary so just use the term works for multiple facets it's engaging it should stimulate people to you know, pick up that product and stand out from the crowd.

And that's also important in wine, because even in bricks and mortar retail, it's usually a quite a big selection. And so, having a competitive advantage through visibility on the shelf is important.

Keith Anderson: Yeah, I want to come back to the consumer perception and, and, you know, attitudes and behaviors towards it. You've mentioned retailers a few times, when you're working with retailers, are these for their private label or own label wines, or how do you work differently with a retailer versus a winery?

Santiago Navarro: Yeah. So we've been really grateful to those retailers who have positively engaged with us and helped us to navigate how we potentially get more wines into their stores. We recognize that, wine producers... well, getting wine producers to push is far, far harder than getting retailers to pull. And what I mean by that is if a retailer says, "We're open to seeing what brands might be interested in this bottle for our stores" and you take that to producers they're of course really excited that there might be an opportunity to get a new listing or listings whilst if you go to producers and say "will you use a novel packaging that's, you know, not got all the data you want to prove that it's zero risk and will you use this and pack into it and then offer it?" Most will say no because I want to prove demand before I take supply.

And so, yeah, the, the engagement retailers is super important. It's mostly been branded to date. There is some own label coming up in 2024. But, but yeah, ultimately we should end up doing both. Because, the big retailers have become very good at own, own label, wines and, and they can be very large volume and that's where we can have the biggest impact on reducing emissions is, once again, Packamama stands for Packaging Protecting Pachamama or Mother Earth and it's really important that that's what we do.

We take all the aspects, the other aspects of packaging super seriously, like protecting the goods that are inside it, being of the best quality, all the food contact approvals, all those matters are taken for granted. And, frankly, if nobody's doing those basics, then they should not be in business.

 But there, in our view, there needs to be another layer and an important layer that's not just some icing to the packaging cake, but it's the foundational items of what you do. And that is being a benchmark example of all the levers you can pull that are meaningful to reduce emissions, because we're in a climate crisis, but also because wine is more deeply impacted than most by global warming.

The vines that give us wine, vitis vinifera, as it's called, so it's one strain of the, of the very varied number of grapes used, including, eating grapes. They are very sensitive to temperature. And for 8, 000 years, they've been, they've enjoyed consistency. And now they get inconsistency.

And that is freak cold, drought, blistering heat. It might go from blistering heat to freezing cold to blistering heat again. So it's these extreme weather events that freak the vines out to avoid getting geeky on technical terms. And they're not good for wine. A couple of years back, France paid out 2 billion euros to producers because of a freak

 cold snap in, in April. Bear in mind that that's in the run up to summer, where, where the vines, you know, the grapes start to ripen and then, then only harvest at the end of summer. And traditionally, actually, Europe has harvested its grapes at the end of summer, but now harvesting comes right into mid summer and August because it's been, so incredibly warm so soon, et cetera.

So yeah, there's more I can share on that. I don't want to get into too much detail on it, but I think it's important to realize that wine has a far larger existential threat risk from global warming than some other products we eat and drink. And so wine must over index in its, meaningful actions to slash its emissions more than others do, because it should do it for its own survival.

Keith Anderson: Yeah, I think it's a great point. We, I come from a background in consulting. And so I love a nice 4 box chart that that sorts things into quadrants. And one way we've been looking at categories across the industry is on one dimension, action you take to mitigate the future impacts of, emissions and warming, and the other is adaptation. And, you know, there are a half dozen categories that are rising to the top of the list, cocoa is one, you know, wine, I think is likely to be another one. Olive oil was one. We interviewed Berk Bahceci of Heraclea, which is a family owned olive oil producer, but he was sharing similar, anecdotes about some of the really significant impacts on yield and surety of supply.

So, in, in some categories, what you're doing is really, trying to reduce emissions so that the problems facing all categories, all retailers and all brands, are, are not getting any worse than they need to be in the future. The flip side, though, is the adaptation part of the equation, which is, because of the growing volatility and uncertainty, you know, some categories are being impacted much more directly and, it's happening today.

So, I think it's an important point that you share.

Santiago Navarro: Yeah, there is, thank you for that, Keith. There are two things discussed regularly in wine about adaptation, not mitigation, and that is grape varieties and location. So, on the grape variety front, in a warming planet, more people can plant the grape strains that have, from let's say southern Italy or Sicily, that have become really, I guess well adapted to blistering heat.

But the reality is the beauty of the world of wine is the cooler climate, chardonnays or pinot noirs from Burgundy, or the wines from Oregon, et cetera, we can't, the, the world of wine loses its beauty. If we suddenly have just a few great varieties delivering a very similar flavor profile, then we have this huge diversity that makes the wine industry unique, not rare, unique in terms of the variability and the beauty it offers.

So, so that's the grape issue. We can't, you know, ignore that. And then location. Of course, there's a possibility to move to where it's currently cooler and abandon where it's warmer. But once again, Australia is a good example, so Tasmania is a cooler part, and south of the mainland continent, but there's not enough space for all the producers to move to Tasmania.

The Northern Californians can't all go to Washington State, which is also good for grape growing and it's more, more than so likely to be cooler. You know, Northern Italy, Tuscany, you know, very beautiful part of Italy. You know, whole communities have subsisted for generations on the wine industry and olive oil.

They can't all move to continental, sorry, the Nordics or to the UK, which is higher up on the European continent. So, yeah, it's, it's, it's, you know, there's already a big growth in the English wine industry because, the climate here has become warmer. But can all French and Italian wine producers move to the UK?

Makes, no, it doesn't make any sense. It's, so adaptation needs to be looked at. But, yeah, if your house is on fire, put out the fire first, not start to look to buy another house. I mean, and that's, that's the reality of how you handle a fire in your house. You put out the fire first.

Keith Anderson: Yep. Well said, I want to, I want to jump back if we can just to the dynamic that you were describing between. The retailers and the producers because I think it parallels something that I'm seeing in many categories, which is, the retailers naturally have some leverage because, well, direct to consumer and marketplaces have really, lowered barriers to entry and made it easier to, you know, hang a shingle up reaching, a critical mass and scaling still happens mostly through retail. And so decisions about assortment and merchandising and marketing, often, you know, how you work with leading retailers is, big driver of your success. So, what I'm, what I'm seeing are retailers that have made commitments and are increasingly shifting their attention to scope three emissions.

And so they're looking upstream and downstream. And most of what I'm seeing at the moment is more encouragement and incentivizing suppliers to, you know, take action that will align, their, their approach to doing business with some of the retailers climate and sustainability commitments. But, you know, what I'm seeing, the reason I asked about Unlabel was, before I understood the approach, I'm seeing some retailers.

Move most aggressively with their own labels to create choice within a category that looks the way they'd like to see things in the near future. And then in parallel, they're doing things like introducing you know, dedicated sections, endcap displays, badges, or other designations that show up online at the digital shelf in store in the physical environment, but ultimately the retailers are increasingly using their position of leverage to try to influence what their suppliers are doing. And if I understood you, that's a dynamic that you're seeing play out as it relates to how you are engaging the industry. Is that, is that correct?

Santiago Navarro: Yeah, so, so a couple, yes is the short answer, but it requires a bit more context. So firstly, you're right, as the retailer being the, gateway to the consumer's wallet, has the power. So, so they can influence change far, far quicker than those who are further down the supply chain, including the very big CPG, multinationals, who will be obvious to those listening to the call, I don't need to mention who they are.

And then if you look at, research done on the emissions from the big international retailers, scope three is where it's all at. So, the last time I saw a presentation on this was from the, great, ladies and gentlemen at Rabobank, the, the, well known international bank. And they were showing high 90 percent across a number of global retailers in terms of what was scope three emissions.

So, retailers have to work with their supply chain to, to reduce their emissions. There's no, no way about that. In terms of the own label versus branded. I understand why probably to date we've done mostly branded, but now we have two big own label projects coming together, which are, you know, all agreed and being put in place in terms of production, et cetera.

 I think wine is probably more branded than most other products. We, whilst there is own label products, if we go into a, you know, if we look at an average basket of goods, grocery goods, wine is probably one of the more branded and the expectation is to show selection because the consumer has a view that the wine industry is all these little producers or probably harvesting by hand.

Of course, the wine industry looks very different than a commercial and than it does in the sort of romanticized pictures. But it's that romanticized picture of the world of wine that partially makes people feel that it's all warm and fluffy. But yeah, the, the own label must, join the branded.

And frankly, there just needs to be a shift in packaging. It's really important that I highlight that my view as an organization that has a focus area on the type of packaging we do. We believe in better bottle packaging. We don't believe in alternative packaging, because in our view, wine is consumed at dining tables with friends and family.

And so having a product that looks good is fundamentally important to the experience. But there are other formats like aluminum cans and, and bag in box technology that have been successful. And I applaud them and I wish them the best of luck. I also wish Lightweight Glass the best of luck. I just believe that the wine industry, if you look at a pie chart in the next few years of the types of packaging used for wine, it should look more like a fair and equitable split across the pie chart, because at the moment It's one big slice and a crumb at the end for anything that's non glass, and that's not a proper split of a pie in any sense of the imagination, and, and, okay, we could get into discussion, by the way, of should you need mineral water that's bottled, but if you do look at mineral water that's bottled, it's available in glass, it's available in PET, it's available in can, it's available in carton.

These are the technologies that exist, that, that work for various reasons, and they satisfy different commercial and sustainable goals. And so, yes, you can see these, and if, and that's the same that happens in most other drinks, but wine. Wine has existed in this bubble. My view is that bubble is no longer remotely possible, let alone sustainable.

So, we will continue to offer a solution that is respectful to heritage and tradition. This is a cross section design of this bottle shape that is designed exactly to replicate the most popular of the two bottle shapes. We will release a burgundy shape and flat pack also, because that bit is not broken.

It's the part that connects the certain grape varieties that, That came from those two popular regions in France, Burgundy and Bordeaux. But, but, yeah, we just need a diversity of packaging to fulfill different consumption occasions, but different commercial and sustainability goals, not a one size fits all.

Keith Anderson: Yeah, I think that's, that's an important and refreshing perspective. In a lot of, in a lot of the aspects of sustainability that I've dug into and packaging and materials seems to be where some of the discourse is most polarized in a sense. You know, there's a lot of, a lot of focus on "we need to transition everything to this approach or that approach."

I think part of what we're uncovering here is, as you say, different consumption occasions, different, commercial and distribution models have different considerations. I think it's, it's really interesting in any of these packaging scenarios to talk about the consumer and not only what it's like when they're at the point of decision, am I going to buy this one or that one?

Which is why I'm glad that we got into some of the brick and mortar and sort of retail experience discussion. And then secondly, at the point of consumption, this is where I see so much of the tension and, sort of stalled progress in a lot of the big multinationals, candidly, because they're struggling to get all of the functions aligned on, you know, our, our packaging is how we stand out at the first moment of truth.

And. It has all of these other important, factors like preventing waste and preserving freshness and protecting the product and, you name it. And so, when, when there's an emerging solution that is sort of singularly focused on the climate or sustainability benefits, there seems to be a lot of resistance if these other factors that we've been talking about aren't considered.

Santiago Navarro: Definitely. I mean, I should be clearer and maybe have said this further up in the conversation that, in our view, sustainability is triple bottom line. When I say sustainability, I don't mean environmentally friendly or eco friendly. That is the planet pillar of sustainability. But when I say sustainability, I mean planet, people, and profits.

You've got to work. You've got to be scalable, you've got to, you know, deliver benefits to the consumer, to probably the most demanding person in business, the chief financial officer, and you've got to, you've got to work for, for Mother Earth, as our planet is, is, so unwell. So, yeah, I think that's, that's, that's an important one on the triple bottom line, if you cannot, show that you can

 be pleasing to all those three, then you're probably not going to significantly scale. But I also want to add to the point you mentioned before, I mean, anyone who says they've got a solution that addresses everything in a, you know, global marketplace or in a, a global industry like wine, 32 to 35 billion bottles annually, that's probably, frankly lying or they don't know what they're talking about.

 

Santiago Navarro: The Coca Cola company is a great example. You know, they went from the iconic glass bottle to PET packaging and aluminium, but they kept the iconic glass bottle and that is served in fancier drinking occasions. If you order a Coke in a fancy restaurant or hotel bar, they will bring it to you in the iconic glass bottle.

They will not serve it from PET or a can. But if you buy it on the go, you're going to get it in one of the two measures and you'll normally see them side by side depending how much Coke you want to drink because that packaging works far better on the go

than than glass will, including the fact that you don't need a bottle opener, but in the glass format you need a bottle opener.

So if you take that out and you know, don't have one of those on your keyring like some people do, but not everyone, then, then you're stuck. How do you get it open? So I think it's important to look to those who have been phenomenally successful, not just successful, and look at what they've done in packaging and how it's worked.

Because rest assured that if there was another packaging format that allowed success, the Coca Cola company would have deployed it.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.Have a question or feedback about Decarbonizing Commerce. Record an audio message https://s.castplus.fm/decarbonizing-commerce?episode=q8023048

This week Keith talks to Irina Gerry, CMO of Change Foods and a sustainable foods industry thought leader, using precision fermentation to commercialize a new way of producing real milk proteins and dairy foods with biotech. Irina's also a founding member and vice chair of the board of the Precision Fermentation Alliance.
Together they walk through her interesting (and in some ways improbable) career in grocery and CPG marketing with a background at iconic plant-based brands, including Silk and So Delicious at Danone. Tune in to meet and learn from Irina about the world of Precision Fermentation and Biotech in food.
Learn more about Irina Gerry:

• Link to Change Food’s website
• Link to Irina’s LinkedIn

To listen to the full episode join our Plus or Pro memberships at decarbonize.co:

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TRANSCRIPT BELOW:

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e commerce, and consumer products through the lenses of low carbon and commercial viability. 

Hi, and welcome to the Decarbonizing Commerce Podcast. I'm your host, Keith Anderson. When I'm speaking to people in the industry, one of the things that I'm emphasizing is that different categories are going to experience a different speed and intensity of change as a result of climate change and action in response to climate change.

And this week's episode is about one of the categories that's already seeing a lot of activity and I think it's going to see Even higher speed and higher intensity change over the coming decade. At last year's Goldman Sachs Global Sustainability Summit, Walmart Chief Sustainability Officer and EVP Kathleen McLaughlin said, "We all know about the 80/20 rule.

In emissions, it's like 99 to 1. You don't need to measure every item to know it's beef, it's dairy, it's electronics. We know what they are." And this week's episode is about dairy in particular, and when I think about some of the alternatives to conventional dairy that are on the market and are on the horizon, I think of a three-legged stool, the first leg of which is plant-based, which is probably the most mature and which I imagine most listeners are familiar with. And plant-based has certainly undergone some setbacks and headwinds over the last few years.

The second leg is cultivated meat, and I, I think, that too has faced some headwinds, both in the US and Europe, despite it being a category that has barely come to market. But just this week, the New York Times had an op-ed on some of the tribulations in that subcategory. But there's a third leg of that stool, which is precision fermentation.

And precision fermentation is, as you'll hear in today's episode, not a brand new technology, but it's a technology that hasn't widely been deployed in the kinds of grocery and food categories that we're going to talk about today. And I, I really wanted listeners of the show to hear from somebody with a perspective on the current and the future outlook for precision fermentation, dairy products.

And so I'm really delighted to have Irina Gerry on the show today. She is a sustainable foods industry thought leader, CMO of Change Foods, which is using precision fermentation to commercialize a new way of producing real milk proteins and dairy foods with biotech. Irina's also a founding member and vice chair of the board of the Precision Fermentation Alliance.

And she spent, a really interesting and in some ways improbable career in grocery and CPG marketing with a background at, iconic plant-based brands, including Silk and So Delicious at Danone, and also has spent time at Procter & Gamble and Deloitte. And I won't keep you much longer because I'm eager for you to meet and learn from Irina, but to me, precision fermentation is such an interesting topic and technology as it relates to this area because, you know, it addresses some of the challenges that some of those other subcategories I mentioned have faced.

And yet there's a long road ahead to drive consumer awareness, understanding, trial, and adoption. And a lot that's happening at retail and could happen at retail as those two examples I shared start to suggest. So this is almost certainly not going to be the last time we cover the topic of precision fermentation, but, it is the first, and I'm really grateful that we have somebody so experienced and thoughtful to review it with us.

So let's meet Irina Gerry, CMO of Change Foods.

Irina, thanks for joining the Decarbonizing Commerce podcast. Great to see you and thanks for being here.

Irina Gerry: It's great to be here.

here Well, you know, this is a topic that, really fascinates me for a lot of reasons. And as I was scoping out who is best positioned to help me and the audience understand it, you sort of rose to the surface.

Keith Anderson: Would you mind just telling us a bit about your background and the work that you're doing now with Change?

Irina Gerry: Absolutely. You know, I started my professional career in consulting. But then during business school, I transitioned into consumer marketing, CPG world. You know, I loved for me, the connection between the product and things you're working on, and just that the tangible product that ends up on the shelf or in your refrigerator and, you know, the combination of the creative and the strategic and the tactical aspects of what it actually takes to make that happen.

So, you know, I jumped in, kind of both feet in and, and spend some time at P&G, the big training ground, and then transitioned into food, and worked on Silk brand for over five years. I actually came in when it was still WhiteWave Foods. So it was a private, you know, smaller company out of Boulder, Colorado.

And then during my tenure there was acquired by Danone. So I kind of have a large blue chip, smaller, you know, acquisition, type of experience. And then was working a lot on the innovation, actually a kind of a long range innovation and discovered this new technology called precision fermentation, and we'll dig into that, and saw such tremendous potential that I actually took a leap and, and joined a tiny, tiny startup, was a third person to join the startup to commercialize that technology. So now I've been an entrepreneur for over three years, really working to not only build, you know, this company, but also this new technology and essentially a new category within food.

So that, that's been my journey in a nutshell.

Keith Anderson: Well, maybe that's a nice springboard to get into what precision fermentation is and, you know, why it's so helpful for the, the broader challenges that you're working on.

Irina Gerry: Yeah. You know, actually before we dive in what precision fermentation is, let's talk maybe a little bit why that even matters. I think it's helpful for people to know the context. So, you probably, you know, I'm assuming you talk a lot about decarbonization and a lot of people know about energy, right?

But food is right up there, after energy, is the second biggest sector to decarbonize. And when you look at food, every way you slice that, you come up against animal source products as the number one category within food that needs decarbonizing, and cows tend to be by far the biggest slice of that pie, given the fact that they produce a lot of methane, naturally, and the fact that they just require a lot of resources, right?

It takes about three calories in, sorry, a hundred calories in to get about one or three calories out in terms of meat and, you know, a hundred calories to 17 calories in terms of milk. So it's a kind of inefficient way of using resources that also happens to be very carbon intensive. And so when I looked at that and, you know, working on plant-based, alternatives was obviously a huge and important part of the solution, right? We could say, "okay, well, if animal based foods are problematic what can we do?" Right? Because we still want to enjoy the foods and the recipes and kind of have the experiences that we have with animal products, but maybe we need some other ways of doing that.

And so focusing on plant-based made a lot of sense at the time. And, you know, I, I'm sure you probably have tried silica products. I've been, you know, a huge fan before I even joined the business, and obviously worked on it. For, for a number of years with, with a great degree of passion because I felt like it offered both a much lower carbon footprint, but also, you know, a great product experience.

However, what I found is that there's some categories where it really works, like milk, I think does a great job and we have a lot of options. And there's some categories where it's very challenging, like cheese, right? Where the product just doesn't deliver. And the more I dug into it from kind of an R&D perspective, "why does it not work as well?"

What I realized is that milk proteins have very particular structure, very particular function, right? At, when you look at it kind of at a food science angle, and that it's really hard to replicate it with plants. And this is how I kind of landed on researching and looking into, "well, what's, what else can we do, right? What other technologies and alternatives exist?" 

And so I found precision fermentation. So let me kind of explain to you what it is. Precision fermentation is different than plant-based because 

we're not actually using plants as the source of ingredient, but rather we're using microorganisms as tiny machinery to produce the exact same molecules that, say, a cow would.

So double clicking on that, it's, it's a combination of, you know, traditional fermentation, so what you already kind of know and love beer, kombucha, yogurt, microorganisms doing the work, but combining that with biotechnology right? Now, where we have, you know, an intersection of genetic engineering tools, AI, CRISPR, et cetera, where you can actually program the microorganisms, right?

It's not new, we use that in medicine, we use that in, in various other industries where, you know, we create vaccines this way, we create insulin this way, but it's combining that and taking that into now saying, "okay, well, if we could make any molecule, why not a food molecule? Why not a milk protein?"

Right? So it's kind of extending this technology into food and what gets me kind of excited about it is that obviously because you're using microorganisms and not macroorganisms, your climate footprint is drastically smaller, right? Not only in terms of carbon, water, land use, et cetera, but you're producing the same exact thing.

So the analogy I like to make is kind of solar to fossil based energy, right? It's the same energy. You flip the lights and it's bright in the room, but it's made through a different technology that's more efficient.

 And that's probably the closest analog, because these microorganisms get, you know, get programmed essentially to produce milk protein.

And then you use that milk protein and you could make a variety of products. In our case, you know, cheese was kind of the, the big, product to go after because there's such a massive gap in terms of nutrition, in terms of stretch and melt and kind of the consumer experience that is holding it back. And so it's newer word, I guess, in, in the ecosystem, precision fermentation, but that's essentially what it does, right?

It's using microorganism to make the exact same ingredient in a very specific and precise way and deliver a massive climate benefit in the process.

Keith Anderson: That was very clear. I do have some follow up questions.

Irina Gerry: Please.

Keith Anderson: So is it, it's something distinct from cultivated meat, which is another term, 

Irina Gerry: Mm hmm. 

Keith Anderson: you hear a lot about, is it not?

Irina Gerry: Yes, it is. So, Cultivated Meat is kind of a different pillar, I call it, of kind of this big technology evolution. In cultivated meat, you take an actual biopsy, usually from a live animal, right? It's a tiny brick, they don't, you know, it's not harming the animal in any sort of major way, right? But you take an actual cell biopsy where you get a number of cells, and then you place those cells inside what, you know, in the industry, it's called either a cultivator or a bioreactor, and you feed them nutrients.

So you're essentially replicating a process that happens inside the animal, right? Because when the cells are inside the animal, they get nutrients delivered to them, you know, through blood flow, and then they grow and they replicate. And what you're doing is you're taking that outside of the animal, because you could deliver the key nutrients in a more efficient way, and you're only growing the cells that you want to grow. So instead of growing, say, the entire cow with the hooves and, you know, the skin and everything else and the organs that we don't tend to eat, you can just grow the muscle tissue, right?

You can just grow a particular part. And again, the the difference there, you're taking cells and you're replicating the entire cell, and you will be eating the entire cell, right? In precision fermentation, you're still working with cells, but you're not actually consuming the cells. You are consuming the product of the cells.

So think of it as one is the product, the other one is the machinery. It's kind of how I would delineate the difference. And the other big difference is obviously when you replicate the whole cell, you get all of the biochemistry of the cell, right? So all of the various components that are naturally there.

When you're using precision fermentation, it's kind of like a sniper rifle technology. You're producing a very specific molecule almost one at a time. So if you think of the difference there, obviously, it's going to have a nutritional difference. It's going to have, difference in terms of the level of complexity, right?

Growing cells is much more complex than growing microorganisms that crank out just the one particular compound that you need. And the other difference I would say is, you know, the use of genetic engineering. I know it's a hot topic and a lot of people have opinions about it. What I would say is while genetic engineering is used in the process, right, so those cells are programmed using genetic engineering techniques, the product is not genetically engineered, the protein itself, because it's exactly the same kind of a copy replica of a milk protein.

And at the end of the fermentation, you filter out your chosen protein, so milk protein using filtration, much like you would in the dairy industry, right? That's how you get to a whey protein. You filter it out from, from milk, and you discard the organisms that made it. So that would be kind of the two big differences in those two technologies,

Keith Anderson: So, I think I understand you that, with precision fermentation, the microorganisms do the work, the output is the protein. What is the input?

Irina Gerry: The input is the, so the microorganisms themselves, right? So you, you take the microorganisms and you do a, you know, kind of a programming program where you get these special microbes, right, that now when fermented will crank out milk proteins. And the inputs are very simple, right? When you look at biology at a biochemistry level, you need a source of carbohydrates, you know, a few vitamins and minerals in a particular conditions, right? So temperature, acidity, presence or absence of air, et cetera. And so the, the precision part of this is controlling for all of these different components, right? The exact nutrient mix, the exact temperature, the exact timing of fermentation, et cetera, that kind of takes what you know as traditional fermentation, beer, right? It's more of a wild process, right? Where you take the microbes, you throw in, you know, the yeast, the sugar, and, and you kind of spin them around at a certain temperature, but you dial it in in a much more precise way. And again, the product is the filtered component, not the entire fermentation broth.

Keith Anderson: Got it, got it, that clarifies. And you said something in the setup that I think was really important, which is some of the, you know, products on the market today that are positioned as alternatives or substitutes, you know, meet some of the criteria, maybe in terms of resource intensity, but I, I tend to think of, especially in food, although it's, it's a framework that's extensible to a lot of categories, some of the other, you know, components of the value equation as being in food, does it taste, as good or, better, you know, secondly, texture, thirdly, nutritional profile, and, and fourthly, you know, what's the price and how does it compare to what I'm used to paying? So maybe we can spend a few minutes just unpacking, the sort of current and maybe the anticipated future competitive dynamics in a sense of some of these precision fermentation offerings on those dimensions.

Irina Gerry: Which one do you want to talk about next or first, I guess?

Keith Anderson: Well, I mean, taste, if I'm understanding you, I'm guessing is almost indistinguishable. If it's the same, same protein derived a different way, is that fair to say? Mm

Irina Gerry: That's, that's the biggest unlock, right? And that's why I got excited about this because dairy is obviously a massive category and, and as we said, you know, milk is, you know, plant-based milk has been around for, for a while. It's an established part of the category. Other segments are much newer, right?

Whether it's cheese, whether it's yogurt, creamer, etc. And when you look at the dairy industry, right? Only a fraction of that is actually sold as, you know, your liquid milk, right? Your milk you buy in the grocery store. A lot of it is those kind of secondary processed foods like yogurt and cheese and ice cream.

But then there's also a massive part of that, that's ingredients that are in the food system that you don't necessarily maybe notice or think about, you know, starting with the most obvious, you know, isolated dairy protein, whey protein, we all, you know, are buying tubs of that now and adding it to our smoothies, but there's also, you know, dairy proteins in all kinds of foods, right, to add nutrition, to add a particular mouthfeel or flavor, that have really all been processed and, you know, repackaged in a way that is, I call it kind of like under the surface dairy, but it's actually a massive component of our food system. And so you could think of application of this technology kind of up and down that ladder and the further, up you go, the easier it is to replace it because, you know, if we're just talking about milk protein, then it becomes a one for one replacement.

Like, think of your nutrition bars. Right, whey protein to whey protein is a direct replacement with no taste or texture difference versus if you think about, you know, cheese and yogurt and ice cream, there are other things in it. Of course, there are fats, there's, you know, other components that may be slightly harder to replace one for one.

And so your taste might vary a little, but I would say, you know, when looking at cheese and that was the problem I was highly focused on, There's such a huge gap that is specifically unlocked by the protein itself, and that's what the struggle has been. And I actually worked on a So Delicious plant-based cheese while at Danone and having access to, you know, some of the best resources within the R&D and ingredient sourcing, it was just still really hard to deliver on consumer expectations with plant proteins alone.

So that's where I say the unlock is, is huge, right? If you look at yogurt, same thing. Dairy yogurt has a high amount of protein. That's what gives it the creaminess, the texture, the nutrition that people love. And that's, this is the technology that allows us to do that in a much more sustainable way.

So I would say from a taste perspective, am I going after, you know, the Parmigiano Reggiano with all of its complexities and, you know, traditional processing and artisanry? No, but I could do probably a heck of a job with, across the other components of, of cheese business, right? Where it would be nearly indistinguishable.

Keith Anderson: And as part of the precision, is it possible and do you think that it's likely that there will be any, engineering of the nutritional profile, as just an example, you know, after recent conversations with my physician, I'm, I'm avoiding saturated fat when I can, so is it realistic to expect that, a precision fermented cheese might have a reduced, saturated fat level?

Irina Gerry: Yeah. So that's interesting what you're asking, right? Because when you look at, again, milk, cheese, yogurt, et cetera, it's not just protein. There's fats. Well, saturated fats is a huge part of that, right, cholesterol. The benefit of working with microorganisms is that it's kind of ingredients up rather than milk down.

When you think of how you make cheese, you take milk, you remove 90 percent of water, and then you coagulate it and you remove, you know, whey proteins, etc. You're working ingredient down. So you're kind of stuck with the saturated fat and the cholesterol and the hormones, everything that kind of tags along from milk.

With precision fermentation, you're going to ingredients up. So we're not replicating cholesterol. We're not replicating saturated fats. We're not replicating a lot of, you know, obviously the, the, the naturally occurring hormones that come with dairy milk product. We're just focused on protein. So you could see how it allows kind of this designer food, in a way, where you could say, "well, I want all the protein, and maybe I want more vitamin B12, and maybe I want the calcium, right? But I don't want the cholesterol, or I want less saturated fat." You, you might end up with some saturated fat, because even if you use plant-based sources, for example, coconut milk is still a source of saturated fat.

But it's different than dairy fat. So it kind of gets complex, but also interesting and promising, right? Where you could say for your particular needs, you might be able to find the cheese that still has the same protein content or more, but a lot lower saturated fat and no cholesterol. And I think that then starts to create a, not just the taste value, but also now a nutrition value, which is, you know, kind of the second thing you mentioned, like, what about the nutrition?

And I think that's really, really fascinating. The third thing I'll put to you, and that's more of a future, but replicating is just the beginning, right? To say, "hey, we just want to make the exact same molecule. And we wanted to replicate the familiar cheese mozzarella," but because it's designer, we could say, "what if we made it better, right? What if we remove allergenicity?" How many kids are allergic to milk protein? What if we're able to remove that, but still deliver the nutrition? What if we improve the calcium carrying capacity and deliver more calcium than dairy could? That opens up an entirely new spectrum of nutrition. That's not just parity, but actually better.

Keith Anderson: That's an interesting, interesting point. So I think we covered taste. I think we covered texture. I think we covered nutrition. You know, now we start to get into, position in the market. And, you know, when I listen to some of the comparative advantages in terms of resource, resource intensity, less water, less land, less energy, you know, on the surface, my guess would be economics might have some advantages, you know, help, help us think about where the technology is, on the maturity curve. You know, it feels to me just as an observer, like we're subscale at the moment, I don't see a ton of these products dominating the categories that we've been discussing, but, you know, where do you think we are on that maturity curve and, and how quickly are we going to scale it?

Irina Gerry: We're definitely subscale, right? So again, as I mentioned to you, the precision fermentation as a big platform technology has been around since the 80s, right? It started in pharma. This is how we produce 99 percent plus of insulin today. You know, a lot of the latest vaccines are produced that way. Drugs, pharmaceuticals.

So it's been used there first because it's, you needed, you know, fewer proteins or ingredients per unit of fermentation, right? So as the tech was expensive and it was still small scale, it was economically viable in pharma and not in other industries, right? But then we, it went into materials, right?

Biofuels. It's now used in cosmetics and when you think about it, it's kind of the unit economics are, we usually do it in, you know, dollars per kilo of product, of fermentation product, right? And so you may have started at a thousand dollars a kilo in pharmaceuticals, and then it's maybe viable, you know, 200 a kilo in cosmetics.

But if you look at food, you need to be in kind of the, the 10 to 20s range. We're talking commodity dairy, right? So if we're trying to say whey protein, casein protein, which are available to buy from a cow today, that's where you are. You're kind of in these, you know, 10 to 20 dollar range. There are obviously companies working on that, but that's going to take some time to get to that level.

However, what I'll tell you is the cost curve reduction pattern is following other patterns that we've seen with technological development, right? Whether it's genetic sequencing, your computing power, et cetera, that continues to develop and as these price points get unlocked, we're seeing these Technologies enter into the categories.

So, say, between cosmetics and, you know, exact dairy, commodity dairy, there's also, you know, adult nutrition, baby formula, medical nutrition. So food, but maybe specialty kind of food where there's a willingness to pay for a particular ingredient that maybe delivers a greater value or greater purity that you can get in market today.

So I would say commodity dairy, we're definitely still sub scale, but I believe that this industry is headed that way within the decade, right? So the projections, I would say that by 2030, these products would be competitive with commercial dairy.

Keith Anderson: In some ways that's sooner than I would have anticipated, just based on how, you know, some of these emerging technologies and, building the distribution channels, driving awareness, trial, all those things, so many of these industry shifts that feel like overnight changes, you know, take decades in some cases to play out, so that's really interesting. Are, are there, markets globally or, individual grocers, restaurants that are particularly, aggressive in, in supporting or pursuing this?

Irina Gerry: I think the climate conversation is happening in many markets today. Right? So if you look at, you know, the United States is obviously one of the world's largest, economies and polluters and a big consumer of animal products, right? Our per capita consumption of animal products is far and away higher than everyone else.

So I think the conversation on climate is highly relevant. We're seeing markets that have maybe Less access to land resources that are very, very open minded to this. Place is like Israel, places like Singapore, where there's not a massive land, right? Because we talked about carbon, but land use in animal agriculture is a huge topic.

You know, globally speaking, we use about a third of ice-free land on this planet just to feed the animals. That'd be a third. And, and the demand for animal products is projected to go up about 70%. So at a planetary scale, that's an unfathomable equation, right? We're just, we're out of earth to, to do it, to produce animal products the way we've been producing them.

But when you scale it back to even individual country levels, you're seeing that some countries are saying this is an unsustainable way, an unsustainable technology, and we are land short anyway. So it creates a much bigger openness to this technology. And the third pillar, I think, of geographies I would point out is those that are water stressed.

And actually that's going to start including the United States. Colorado on, you know, west is extremely water stressed and guess who the biggest consumer of water resources is? It's animal agriculture and it's predominantly cows. So when we look at what's happening in California and, you know, Arizona, Nevada, et cetera, you can't ignore the cows as part of that equation.

And so that's becoming a topic. Obviously anywhere in the Middle East is another great example where they do have land, but you know, not much water and a population that continues to demand higher quality, you know, animal type foods. And so we are then seeing kind of a third wave of interest from those countries as well, and then I would add on a layer of what we call food security, and I know it's probably a bit further into, you know, off of people's mind and in kind of US retail, but food security in the next decade is going to become a topic. I think we've all had a taste of that with, you know, the Ukraine crisis and crops and oils, et cetera, between climate instability and political instability.

I think that's going to be an increasingly important topic and being able to localize supply chain of important food ingredients like milk proteins is very appealing. So when I look at it globally, I, I see kind of several concentrated hot markets where those factors come together. And I think U.S. is one of them.

Absolutely.

Keith Anderson: It's interesting that you highlight the stability and purity of supply. I think in my first wave of inquiry in this whole space, I saw a huge amount of energy and focus on the decarbonization side and mitigating additional warming and emissions. But increasingly, what I see the retailers in particular talking about is whether it's localization or other strategies for stabilizing supply chains, which to me is, is sort of the adaptation side of the coin.

I, I think it's going to be a growing focus and in some ways, easier for companies to prioritize in the near term, because if they're already experiencing material disruption, as they did from the pandemic, as some retailers are openly stating, they are from more extreme weather and, you know, crop yields and, and quality are more volatile than

Irina Gerry: And pricing fluctuations, right? When you look at big impacts, and again, let's just look in the U. S. on, in one hand, it We feel food secure because it's such a massive country with so much farmland. But on the other hand, we are seeing huge water stress across the southern half of the United States. We're seeing huge heat stress coming from the heat waves, right?

It impacts our corn belt. Guess where corn goes? Guess where soy goes? It is all part of animal feed, so it's an upstream impact to the supply chain. We're not as food secure as we feel today, and when we go to these global markets, again, they're not either. So I would say food security, again, maybe not top of mind, but, but will be, rather rapidly and the benefit of these ingredients, because they're identical, they, it's kind of a plug and play, right?

So if I'm making nutrition bars with whey protein, I could source whey protein and be subject to market price fluctuations of global dairy market, or I could potentially have a, you know, a facility in the Midwest that produces it that's independent of, you know, water, climate, heat, stress, et cetera. 

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Well, this has been fascinating and informative. Really appreciate you joining the show. If people want to learn more about Change Foods or get in touch with you, where would you send them?

Irina Gerry: I would send them on, on LinkedIn, I guess. I'm, I'm, a frequent user. I love the platform. So find me there. 

Keith Anderson: Perfect. Well, thanks again, Irina. 

Irina Gerry: Thank you so much. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.

co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.



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